Real Estate Course Chapter 14 Flashcards
The 365-day method calculates the proration using the actual number of days in the proration period and is more accurate than the statutory month method. True or False?
True
Prepaid rent is entered on the closing statement as a debit to the seller and as a credit to the buyer. True or False
True
True or False - A transfer of title occurs at title closing, when the seller delivers title to the buyer in exchange for the purchase price.
True
To prorate means …
to divide various charges and credits between buyer and seller
The charges associated with the preparation of the deed are usually paid by the …
Seller (grantor)
The charges associated with the preparation of the mortgage and note are usually paid by the …
Buyer (mortgagor)
Items credited to the buyer include the earnest money deposit.
True
How are Doc Stamps figured on the deed?
It is based on the full sale price. 70 cents on every $100. Remember to round up to the next increment (i.e. $30,323 * 100 = 303.23 or 304 x .70 = $212.80)
What is the state tax rate for Doc Stamps on notes?
The tax rate on notes is $.35 per $100, or fraction thereof, on the face value of any NEW OR ASSUMED promissory note. Remember to round up (i.e 35,324 * 100 = 353.24 - or 354 x .35 = $106.20).
When calculating rents owed in a closing, does the day of closing belong to the buyer?
YES. Also do not forget to add the 31st day if a month has one or if the month only has 28 days
To change a decimal to a percentage, move the decimal two places to the ______ and add a percentage sign.
Right
To change a percentage to a decimal, move the decimal two places to the ______ and get rid of the percentage sign.
Left
How do you convert a fraction into a decimal?
Divide the denominator into the numerator. Example: 3/4 = 3 divided into 4 = 75%
Profit is …
how much you make over and above your cost
It is customary when transferring title to have all prorated items determined as of the …
midnight before the date of closing. In some areas in can be the day of close
To prorate costs two methods are used. They are
The 30 day method and the 365 method.
The 30 day method is also called
Statutory month method.
How do you calculate with respect to the 30 day method?
1) determine the yearly cost of the item
2) divide by 12 to find the cost per month
3) divide by 30 to find the cost per day.
IMPORTANT: every month is assumed to have 30 days. A close of 7/23 would have 202 days (30 x 6 + 22). Remember you don’t count day of close.
5) multiply the total number of days X the cost per day.
How do you calculate with respect to the 365 day method?
1) divide 365 into the yearly cost of the item to get the daily rate
2) multiply the number of days involved with the daily rate.
What is the state tax rate for the State Intangible tax on new mortgages?
.002 ( two-tenths of one cent) PER DOLLAR of debt.
How is the buyer’s binder deposit entered on the closing statement?
CREDIT TO BUYER ONLY
Property taxes are paid in _______ using a _____ day year
arrears, 365
Intangible tax is paid on _____ debt, whereas doc stamp tax on notes is paid on __________ notes
Intangible tax is paid on NEW debt, whereas doc stamp tax on notes is paid on NEW and ASSUMED mortgage notes.
