Chapter 14 key terms

Question 1

Arrears

Answer 1

In Florida, when property tax bills are mailed on November 1, they go to the property owner of record who is responsible to pay for the entire year. This is called paying taxes in arrears. If the closing takes place in July, the seller has not received the current tax bill yet.closing, the real estate taxes are collected from the seller for the portion through the closing day, and given to the buyer so that they can pay the taxes for the entire year when due.

Question 2

Credit (receipt)

Answer 2

The total purchase price is paid to the seller and entered as a credit

Question 3

Debit(expense)

Answer 3

Under the buyer statement, the total purchase price is entered as a debit

Question 4

Pre-closing inspection

Answer 4

Walk-through/pre-closing inspection, I’ll walk-through the property is scheduled to determined that the inclusion stated in the contract remain, and that all agreed-upon repairs have been made

Question 5

Profit

Answer 5

To estimate the sellers percentage of profit or loss on the property, divide the sellers estimated proceeds from the projected sale of the property by the original amount. They paid when they first bought the property.
Sellers profit or loss %= estimated proceeds from Sale/original purchase price

Question 6

Proration

Answer 6

Prorating is the division of items that cover time. During which both the seller and the buyer own the property. These must be proportionately divided between the buyer and seller based on the amount of time each owns the property.
All operations are entered as a double entry in the closing worksheet, since one, Party will have to pay the other some money at closing. If the proration requires the seller to be debited, the same amount must appear as a credit to the buyer and vice versa.