Prorate rents and expenses?

Question

I'm under contract to sell a duplex in Columbus, OH.  When prorating the month of May is it just the rents that are prorated and given to the buyer or is it the net of rents and expenses for the month?

Michael Helfant · Answer

Just the rents. Utilities you'll call and put in your name and water bill will stay with the property (at least here in Metro Detroit) but sellers will put some money with title in escrow in case they don't get a final water reading or pay that water bill before leaving.

Remington Lyman · Answer

The pro-rated rents are credited to the buyer at closed. Make sure you check your settlement statement for these and the security deposits. In Columbus, Ohio CMHA closes their books on the 20th so if you close on a property with a section 8 tenant then you need to get their government assistance for the next month on the settlement statement as well.

Marc Rice · Answer

@Troy Martin

Everyone covered it here - rents, security deposits, property taxes, and anything prepaid.

Theresa Harris · Answer

Michael is right.  If the tenants pay the water indirectly, then you need to sort that out with them.  Don't forget that you also have to give the new buyers the security deposits.

Brandon Sturgill · Answer

Property management is the first deduction as soon as rent is paid, but the credit is calculated as gross rent per lease terms

Brandon Sturgill · Answer

@Troy Martin Nothing is given to the buyer...it will be a credit on the settlement statement (no money changes hands). The rent will be prorated and the deposit (per lease terms) is typically a credit as well. Your agent should walk you through this and your net to seller calculations should be updated the closer you get to closing.

Troy Martin · Answer

Thanks everyone. I was thinking that something like property management would be taken out of the gross rents then prorated.  From what I'm gathering though when the seller sells the property their net income might be lower that month based on expenses.

Prorate rents and expenses?

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