What is the term for the apportionment of property tax payments at closing?

The term for the apportionment of property tax payments at closing is known as proration. This occurs when the property taxes for the year are divided between the buyer and seller based on the closing date. It ensures that each party pays their fair share of the property taxes based on the time they owned the property during that tax year.

When closing a real estate transaction, proration helps to equitably distribute any expenses that need to be accounted for up to the closing date. For instance, if the seller has prepaid property taxes for the entire year but sells the property halfway through the year, the buyer would reimburse the seller for the portion of the taxes covering the remaining months of the year that the buyer will own the property.

This process is crucial because it clarifies financial responsibilities and prevents disputes between the parties regarding who owes what for the property’s fiscal obligations up to the point of sale. Hence, proration is the correct term used in this context.