Question

Closing prorations are based on: Select one:

a. 365 days in a year
b. 52 weeks in a year
c. Actual days in a year
d. 30 day month and 360 day year

Answer 1

Closing prorations in real estate transactions are typically based on a conventional year of 360 days, with each month assumed to have 30 days. This simplification helps in making the calculations uniform across transactions. So the correct answer is option A.

Step-by-step explanation:

The question you've asked about closing prorations involves figuring out the division of expenses like taxes, utility fees, or rents at the closing of a real estate transaction. The proration is based on a conventional period within a year. While there are actually 365 days in a non-leap year, and 365.2422 days on average due to the inclusion of leap years, for proration calculations in real estate, we commonly use a simplified year length. The accepted method typically assumes a year has 360 days, comprising twelve 30-day months. This simplification makes the calculations easier and more uniform, regardless of actual days in the closing month.