The Bottom Line on Prorations

Even veteran escrow officers can get confused about buyer and seller prorations, especially if they're rushing to complete closing statements. So, if you get confused about prorations, don't feel like you're alone in that confusion.

I went to a closing last week, which for those of you not in California means the buyers are signing loan documents and depositing funds into an escrow in hopes that the deed and trust deed will record a few days later, resulting in an actual closing. The escrow officer worked overtime the night before putting together the closing statement, and she e-mailed it to me. I noticed that she charged the buyers for six months of property taxes and then credited an amount for the period of time they would occupy the property. On the surface, it sounds feasible, but that's not the way it works, especially when property taxes aren't yet due and payable.

It was backwards.

In an attempt to rectify the situation, I e-mailed the escrow officer, asking why wasn't she charging the sellers' account and then charging the buyers for their occupancy period. She replied that her calculations were correct, a position she continued to hold when we met at closing the following morning.

I have patience. So, my buyers and I waited while the escrow officer disappeared into another room to discuss the situation with her boss. She didn't come back, but the right prorations finally appeared on a new closing statement . . . read more about prorations.

More Articles by Elizabeth Weintraub, click below:

• What is Tenants in Common?
  
• Property Deeds That Transfer Title
  
• Do You Need a Title Insurance Policy?

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