casemark/proration-schedule

Proration Schedule

Drafts a mathematically precise proration schedule allocating property expenses, income, and obligations between buyer and seller at closing.

Prerequisites

Collect before drafting:

1. Purchase agreement — closing date, closing-date-charge convention, proration terms
2. Property tax records — current/prior year bills, assessment notices, pending appeals
3. HOA documents — governing docs, statements, special assessments
4. Lease agreements (if tenant-occupied) — rent rolls, security deposits, prepaid rent
5. Utility bills — water, sewer, trash, property-linked services
6. Title commitment — legal description, parcel ID, encumbrances
7. Insurance policies (if transferring) — premiums and coverage periods

Quick Start

1. Gather all prerequisite documents
2. Set closing date and day-count convention (365-day default or 360-day if jurisdictionally required)
3. Determine closing-date allocation (buyer or seller bears closing date)
4. Identify all proration items from the checklist
5. Calculate daily rates and allocations for each item
6. Draft post-closing adjustment provision for estimated amounts
7. Verify net proration ties to settlement statement / Closing Disclosure

Document Header

Include: document title ("Proration Schedule"), preparation date, closing date, property (address + legal description + parcel ID), escrow/file number, seller(s) and buyer(s) full legal names and addresses, applicable jurisdiction, and day-count convention used.

Proration Items Checklist

Identify all applicable items:

• Real property taxes (actual or estimated)
• HOA regular fees and special assessments
• Rental income and security deposit transfers
• Water/sewer, trash, other property-linked utilities
• Prepaid insurance premiums (if policy transfers)
• Improvement district / special district charges

Calculation Table

For each proration item, present:

| Column | Description | |--------|-------------| | Item | Description of charge | | Total Amount | Full periodic amount | | Period Covered | Start–end dates | | Daily Rate | Total ÷ days in period | | Seller Days / Amount | Days responsible × daily rate | | Buyer Days / Amount | Days responsible × daily rate | | Credit To | Buyer or Seller |

Day-Count Convention

• Default: 365-day year (actual days per period)
• Alternative: 360-day year / 30-day months — apply local convention and document which is used

Closing-Date Allocation

1. Check purchase agreement for explicit allocation
2. If silent, apply prevailing jurisdictional custom
3. Document the convention in the schedule header

Property Tax Rules

• State whether based on actual or estimated (prior-year) bill
• Disclose pending reassessments or tax appeals and explain impact
• Arrears jurisdictions: seller credited for prepayment or debited for accrued liability
• Advance-payment jurisdictions: seller credited for post-closing prepaid portion
• Always include post-closing true-up provision

Rental Income Rules

• Prorate collected rent as of closing date
• Advance rent beyond closing → credit to buyer
• Security deposits: transfer to buyer (not prorated); seller receives corresponding debit
• Note partial-month rent calculations

Summary

Net proration must appear as:

• Total credits to seller
• Total credits to buyer
• Net proration adjustment (credit to buyer or seller)

This net figure must tie exactly to the proration line on the settlement statement / Closing Disclosure.

Post-Closing Adjustment Provision

Include clauses for:

1. Property taxes — true-up if actual bill differs from estimate by more than $[threshold]; buyer obtains final bill; adjustment within [X] days
2. Utilities — final meter readings post-closing; seller liable through closing date; 60-day adjustment deadline
3. Retroactive assessments — seller liable for charges attributable to seller's ownership period
4. Refunds — buyer remits to seller any refund/credit for seller's ownership period
5. Settlement method — direct payment between parties unless otherwise agreed

Regulatory Compliance

• TILA-RESPA (residential + federally related mortgage): proration figures must match Closing Disclosure entries; this schedule is backup documentation
• State-specific rules: verify jurisdiction-mandated calculation methods, required disclosures, and statutory allocation requirements
• Note applicable jurisdiction in document header

Execution Block

Signature lines for all buyers and sellers: printed name, signature, date, and acknowledgment that parties reviewed calculations and agree to allocations. Label as exhibit to settlement statement / Closing Disclosure.

Pitfalls and Checks

• Show all math — every daily rate derivation must be visible
• Match name/entity references to title documents exactly
• Number all pages; include property address and closing date in footer
• Flag estimated amounts and tie to post-closing adjustment provision
• Never assume tax amounts — use prior-year estimate if bills unavailable and label accordingly
• Add notary blocks if required by lender or local custom
• Final check: net proration must reconcile to settlement statement line item