What is “prorating”?
Certain items (real estate taxes, some utility bills, occasionally special assessments, etc.) are prorated at closing. “Prorating” occurs when you and the seller are each responsible for a portion of an expense. For example, property taxes are assessed as of January 1 but not normally payable until the end of the year. The seller is responsible for his share of the property taxes from January 1 through the closing date. You will be responsible for the remainder of the year. Review the contract carefully to be sure you know what items, if any, will be prorated at closing.
The first invoice you will receive from most service providers will include a prorated amount for Monthly Charges. It is also called “prorate”. This prorate is for the period of time between the date you began service with the provider and your first bill. It is also important to note that Monthly Charges are applied one month in advance.
