Exam math
Proration calculator
Dividing a shared expense at closing. The division is simple arithmetic, and the part exam questions actually test is the direction: who credits whom, and why.
Your figures
Property taxes, insurance, HOA dues or rent, expressed for a full year.
Count to but usually not including the closing date, unless the contract says otherwise.
Settlement amount
$2,400.00
The item is owed in arrears, so the seller credits the buyer for the days they owned. Credit buyer, debit seller.
Direction matters more than arithmetic
The division is easy. What questions actually test is who owes whom. If the seller has already paid for a period extending past closing, the buyer reimburses them: credit seller, debit buyer. If the charge has not yet been paid and covers a period the seller owned, the seller credits the buyer: credit buyer, debit seller.
Complete results, no email, no account. Every calculation here is backed by a tested fixture, so the figure you see is the figure the test asserts. How we verify
How this is calculated
Divide the annual amount by the day-count basis to get a daily rate, then multiply by the days each party is responsible for. The banker's year of 360 days with 30-day months is the exam default unless a question says actual days. Real California escrows more often use actual days, so both appear.
The direction follows from whether the item was prepaid or is owed in arrears. If the seller has already paid for a period extending past closing, such as an insurance premium or HOA dues, the buyer reimburses them for the unused portion: credit seller, debit buyer. If the charge has not yet been paid and covers a period the seller owned, such as property taxes, the seller credits the buyer: credit buyer, debit seller.
California property taxes are billed in two instalments. The first is due November 1 and delinquent after December 10. The second is due February 1 and delinquent after April 10. The mnemonic candidates use is No Darn Fooling Around, taking the first letter of each month. Knowing where a closing date sits relative to those dates tells you whether taxes have been paid for the period in question.