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Complete glossary lessonNational exam concept

Proration

Proration is the allocation of a periodic income or expense between buyer and seller according to the portion of the period each party owns or occupies the property and the closing convention stated in the problem.

Official area

Real Estate Calculations

Knowledge cluster

Closing calculations

Learning sequence

Define, distinguish, apply, retrieve

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Exam purpose

Recognize the rule, then reject the nearest look-alike.

Georgia lens

Apply the state distinction only when the facts call for it.

Connected terms

Connected to 4 terms and one official content area.

What does Proration mean in real estate?

Proration is the allocation of a periodic income or expense between buyer and seller according to the portion of the period each party owns or occupies the property and the closing convention stated in the problem.

How is Proration different from the closest exam answer?

Accrued items are paid in arrears, so the seller commonly owes the buyer a share through closing. Prepaid items can produce the opposite credit and debit.

What is the Georgia-specific rule?

Use the day-count method and ownership-of-closing-day convention supplied by the exam question or contract. Do not assume every Georgia problem uses the same convention.

Worked exam example

Scenario

Annual taxes are unpaid and the seller owns through the stated closing day. The seller is debited and the buyer credited for the seller's share.

Decision rule

Accrued items are paid in arrears, so the seller commonly owes the buyer a share through closing. Prepaid items can produce the opposite credit and debit.

What is the most common exam trap?

Trap correction

Candidates often calculate the amount correctly and then reverse the debit and credit.

Memory cue: Candidates often calculate the amount correctly and then reverse the debit and credit.

Original exam check

Apply the definition

Which statement correctly explains Proration?

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Related terms to learn next

Seller net proceeds

Seller net proceeds are the amount a seller receives after subtracting payoff amounts, brokerage compensation, taxes, closing costs, debits, and other seller obligations from the gross sale proceeds, then adding any seller credits.

Buyer funds needed at closing

Buyer funds needed at closing are the buyer's purchase-price obligation plus buyer closing costs and debits, minus loan proceeds, deposits already paid, seller credits, and other credits shown in the problem.

Closing attorney

A closing attorney is the Georgia-licensed lawyer who conducts the legal closing, oversees execution and disbursement, and handles the conveyancing and title-related legal work that constitutes the practice of law.

Ad valorem tax

Ad valorem tax is a tax based on property value.

Recommended next complete lesson

Continue with Real Estate Calculations complete lesson. It places this term inside the full rule, worked examples, exam traps, and mixed practice required for mastery.
Previous termBuyer funds needed at closingNext term Equity

Proration quick answers

Facts checked against the current PSI Candidate Information Bulletin and GREC sources. Editorial standards.

What is Proration?

Proration is the allocation of a periodic income or expense between buyer and seller according to the portion of the period each party owns or occupies the property and the closing convention stated in the problem.

What is Proration commonly confused with?

Accrued items are paid in arrears, so the seller commonly owes the buyer a share through closing. Prepaid items can produce the opposite credit and debit.

How does Georgia treat Proration?

Use the day-count method and ownership-of-closing-day convention supplied by the exam question or contract. Do not assume every Georgia problem uses the same convention.