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"Proration" is a term used in real estate to describe the process of dividing up expenses or income items between the buyer and seller at closing. It's a way of making sure that each party is responsible for paying their fair share of things like property taxes, insurance, interest, or rent.
Let's say that John sells his house to Jane, and they agree to split the property taxes for the year. The property taxes are $2,000 for the year, and they're closing on the sale in June. In this case, the property taxes would need to be prorated between John and Jane. John would be responsible for paying for the first half of the year, which would be $1,000, and Jane would be responsible for paying for the second half of the year, which would also be $1,000.
"Wit & Whimsy with the Dumb Ox: Unlocking Knowledge with Rhyme:"
In real estate, proration is key,
To divide expenses and income fairly.
Taxes, insurance, rent, and more,
All prorated at closing, that's the score!