Understanding Your Numbers
What “Prorations” Means on Your Statement
Quick Answer
Some costs are billed for a whole year but the property changes hands partway through it. A proration divides that cost at the closing date, so each side pays for the days they own the property.
Property taxes and HOA dues are the usual ones.
Why some are credits and some are charges
It depends entirely on whether the bill has already been paid.
Paid in advance. If the seller has already paid dues through the end of the year, the buyer owes them for the unused part. That is a credit to the seller.
Billed in arrears. If the tax bill has not come yet, the seller owes the buyer for the months they owned the property, because the buyer will pay the whole bill later. That is a charge against the seller.
This is why the Prorations section is the one part of a net sheet that can run in either direction, and why it shows separate credit and debit subtotals rather than a single number.
The date range is on the line
Each proration line names the period it was worked out from, so a line reads like Property tax proration (Jan 1 to Sep 15). If a figure looks wrong, that range is the first thing to check: it tells you which closing date the number assumes.
When the closing date moves
A proration calculated for one closing date does not describe another. Move a closing from the 15th to the 30th and both sides’ shares change.
The tool flags this rather than quietly redoing the arithmetic. If the closing date changes after a proration was worked out, the affected rows are highlighted and a notice appears saying they came from the old date. Nothing is silently rewritten, because whoever entered it may have adjusted the figure deliberately and a number changing on its own on a client’s document is worse than one marked as stale.
If you are looking at a net sheet with highlighted prorations, it was built across a closing-date change and those lines need a second look before you rely on them.
What the final figure is
Prorations on an estimate are calculated from the annual amounts entered at the time. The binding split is the one on the settlement statement at closing. See Why a net sheet won’t match the final settlement statement.
