Adjustment Of Charges And Income (Real Estate) in United States
Practical Information
Note: Some of this information was last updated in 1982
Upon a sale of real property (in U.S. law), an equitable apportionment, or proration, between seller and purchaser of the charges against the property to be conveyed and of any income produced by the property.
Date of adjustment
In many instances, adjustments are made as of the day immediately preceding the day on which title (in U.S. law) is closed; that is, the purchaser bears the charges and receives the income beginning with and including the day on which title passes to him or her. The contract of sale (in U.S. law) may, however, fix some earlier date of adjustment. If the date for closing title (in U.S. law) is postponed, the consent to adjournment may indicate a new date of adjustment.
Items adjusted
The following are generally apportioned between purchaser and seller: 1. Taxes
2. Interest on mortgages. Interest is adjusted from the date of the last payment.
3. Rents. In the case of rents collected by the seller for the month in which title is closed, the purchaser is entitled to that portion representing the unexpired part of the month. If rents that have become due have not been paid at the date of closing, the purchaser may give to the seller written assurance, in the form of a letter, that upon receipt of the rent, the purchaser will turn over to the seller the portion to which the seller is entitled. The contract of sale may enumerate the items to be adjusted. Other items not mentioned, for example, fuel on hand, prepayments on service contracts, and the like, may also be prorated according to local practice. If payment due on the closing is to be made by certified check, the purchaser should bring to the closing a check for the approximate amount and sufficient cash to cover adjustments. 4. Water charges.
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