Question

If the monthly property tax rate is $74.15 and the closing is on April 30, what will the seller owe at closing? Assume a statutory calendar and that the seller hasn't made any payments. Round to the nearest cent.

a) $29.66
b) $51.46
c) $74.15
d) $25.00

Answer 1

The seller owes the full month's property tax rate of $74.15 at closing because the closing is on the last day of the month, and there have been no previous payments made.

Step-by-step explanation:

To calculate the property tax owed by the seller at closing, we can use a simple proration formula based on the number of days in the month up to the closing date. Since the monthly property tax rate is $74.15 and the closing date is on April 30th, the seller would be responsible for the entire month of April. April is assumed to have 30 days (using a statutory calendar), which means that for every day of the month, the seller owes $2.4717 (which is $74.15 divided by 30 days). However, since the seller hasn't made any payments and the closing is on the last day of the month, they owe the full monthly amount.

Therefore, the seller owes the full month's property tax of $74.15 at closing.

The correct answer is option (c) $74.15.