Question

A house with a basement apartment is sold. The apartment rents for $600 per month, due on the first of the month. The sale of the house closes escrow on November 19th. Which of the following statements about the proration of the current month's rent is correct? Select one:

a. The buyer owes the seller $240
b. The buyer owes the seller $360
c. The seller owes the buyer $240
d. The seller owes the buyer $360

Answer 1

The correct statement about the proration of the rent is that the seller owes the buyer $240, which represents the rent for the period from November 19th to the end of the month after the house sale closes escrow.

Step-by-step explanation:

To determine who owes who and how much for the proration of the current month's rent when a house with a basement apartment is sold, we need to calculate the rent amount for the portion of the month after the sale closes escrow. Let's assume a 30-day month for simplicity. With the rent at $600 per month, the daily rent is $20 per day ($600 divided by 30 days). The sale closes on November 19th, meaning the buyer owns the apartment for 12 days in November (from the 19th to the 30th). Therefore, the buyer owes the seller for these 12 days, which totals $240 (12 days multiplied by $20 per day).

The correct statement about the proration of the current month's rent is: c. The seller owes the buyer $240. This is because the seller would have collected the full month's rent at the first of the month, but is not entitled to keep the rent for the period after the sale is finalized and the buyer owns the property.