Chapter 7.2: From Contract To Completion Flashcards
When setting up a T sheet, the buyer or purchaser should always be on the _______
Left
When setting up a T-sheet, the seller and vendor should always be on the ________
Right!
With a tee sheet, _________ appears on the left, __________ appears on the right
Debit
Credit
On the buyer / purchaser side, what value always appears at the end
Balance due for purchasers
Balance due is always for buyers
On the seller / vendor side, what value always appears at the bottom?
Cash proceeds for vendors
Cash proceeds always goes with the seller
__________________: this is the date in which the transaction is done (finished) … the money is transferred to the seller and the land title is transferred to the buyer
Completion date
When does the real estate agent get paid?
On the completion date - subject to any tenancy agreement
__________________: the day the purchaser GETS THE KEYS; where they get physical access to the property
Possession date
*usually 1 day after completion date
______________: the day the lawyers use to tally up the debits and credits to see who needs to pay what to whom to balance out the deal
Adjustment date
__________ is the cut-off day for taxes
July 1st
You are paying taxes from January 1st to December 31st of the ____________
Current year
How many days does July have?
31!!
How many days does May have?
31!
How many days does February have?
28 days!
Example 1: Taxes were previously paid by Vendor (Seller)
The vendor has paid the annual taxes for the property
In this example, they’re gonna pay $1200. The adjustment date is October 23rd
Who is responsible for the taxes?
The seller
As he was in the house on July 1st which is the tax cutoff
Example 1: Taxes were previously paid by Vendor (Seller)
The vendor has paid the annual taxes for the property
In this example, they’re gonna pay $1200. The adjustment date is October 23rd
Who owes money to who!
The buyer owes money to the seller
As the seller would have paid taxes given he was in the house for July 1st
Example 1: Taxes were previously paid by Vendor (Seller)
The vendor has paid the annual taxes for the property
In this example, they’re gonna pay $1200. The adjustment date is October 23rd
The buyer portion of taxes he owes is what? (Time period)
October 23rd-December 31st
You gotta pay the difference
Example 1: Taxes were previously paid by Vendor (Seller)
The vendor has paid the annual taxes for the property
In this example, they’re gonna pay $1200. The adjustment date is October 23rd
Count the days of how many days the buyer will be in the house
October 23rd-December 31st = 70 day
Oct 31 - 23, +1 + Nov 30 + Dec 31 = 70
Example 1: Taxes were previously paid by Vendor (Seller)
The vendor has paid the annual taxes for the property
In this example, they’re gonna pay $1200. The adjustment date is October 23rd
Now we know there is 70 days, do the math for the buyers amount he owes
70 / 365 = 0.19178
0.19178 x 1200 = $230.14
Example 1: Taxes were previously paid by Vendor (Seller)
The vendor has paid the annual taxes for the property
In this example, they’re gonna pay $1200. The adjustment date is October 23rd
Now we know the buyer owes $230.14, complete the T-sheet
Buyers side
Debit: $230.14
Sellers side:
Credit: $230.14
Remember, when trying to figure out who owes who money, look at the _________ cutoff date. Whoever was in the house at that date, pays the bill (which day of the year?)
July 1st
Example #2: taxes due but not paid yet
The taxes in the amount of $1095 are due but not yet have been paid. A penalty of $105 is owing. The adjustment date is August 31st
Who is responsible for the taxes?
The seller!
As august 31st is past July 1st
Example #2: taxes due but not paid yet
The taxes in the amount of $1095 are due but not yet have been paid. A penalty of $105 is owing. The adjustment date is August 31st
Who owes money to whom?
The buyer owes the seller money
As the seller would have paid the taxes on July 1st cutoff date
Example #2: taxes due but not paid yet
The taxes in the amount of $1095 are due but not yet have been paid. A penalty of $105 is owing. The adjustment date is August 31st
Now, calculate what portion of the buyers taxes need to be accounted for
August 31st - December 31st
Example #2: taxes due but not paid yet
The taxes in the amount of $1095 are due but not yet have been paid. A penalty of $105 is owing. The adjustment date is August 31st
Now that we know it’s August 31st to December 31st, count the days
August 31st to December 31st = 123
Aug 31st - 31, +1, + sep 30 + Oct 31 + nov 30 + Dec 31 = 123
Example #2: taxes due but not paid yet
The taxes in the amount of $1095 are due but not yet have been paid. A penalty of $105 is owing. The adjustment date is August 31st
Now that we know it’s 123 days, calculate how much the buyer owes
123 / 365 = 0.33698
0.33698 x $1095 = $369
Buyer is not subject to the penalty as the seller was responsible to pay on time
Example #2: taxes due but not paid yet
The taxes in the amount of $1095 are due but not yet have been paid. A penalty of $105 is owing. The adjustment date is August 31st
Now that we know it’s $369 the buyer owes the seller, set up the T-sheet
Buyer
Debit: $369
Seller:
Credit: $369
Debit: $105 (late fee buyer doesn’t pay)
Example #3: Taxes to be paid in the future by purchaser
The net taxes are not yet due, but last years taxes were $1,200. The adjustment date is March 10th
Who is responsible for paying the taxes?
The buyer
As March 10th is before July 1st
Example #3: Taxes to be paid in the future by purchaser
The net taxes are not yet due, but last years taxes were $1,200. The adjustment date is March 10th
Who owes money to whom?
The seller owes money to the buyer
Example #3: Taxes to be paid in the future by purchaser
The net taxes are not yet due, but last years taxes were $1,200. The adjustment date is March 10th
Find the portion the seller will have to pay (just the dates)
January 1st - March 9th
