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
An expense such as property taxes, insurance or HOA dues, expressed for a full year. This expense model does not prorate advance rent collected by the seller.
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
If the seller has already paid an expense 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. Rent collected in advance is income, not a prepaid expense. The portion belonging to the buyer's ownership period is a buyer credit and seller debit.
Complete results, no email, no account. Calculation methods are checked with regression cases. Inspect your inputs, units and the stated assumptions. 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. A banker's year uses 360 days and twelve 30-day months. An actual-day problem uses the stated calendar days. Follow the basis in the question or escrow instructions. DRE does not publish a rule that every exam item silently defaults to one basis, so this tool supports both.
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.
Regular California secured property taxes are billed in two installments. 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. These dates identify the ordinary due and delinquency points, not whether the owner actually paid. Check the payment record and tax period. Weekend and holiday extensions can change the deadline.
Common questions
What is a banker's year in real estate proration?
A 360-day year made of twelve 30-day months. It simplifies proration arithmetic. Use it when the question states a 360-day or 30-day-month convention; use actual days when the question or escrow instructions require them. On a banker's year, $7,200 a year is exactly $20 a day.
When are California property taxes due?
The first installment is due November 1 and delinquent after December 10. The second is due February 1 and delinquent after April 10. The mnemonic is No Darn Fooling Around, from the first letters of November, December, February and April.
Who gets the credit in a tax proration?
It depends on whether the tax has been paid. If taxes are owed in arrears and cover a period the seller owned, the seller credits the buyer, who will pay the bill. If the seller prepaid for a period extending past closing, the buyer reimburses the seller for the unused portion.