What are “prorations” that are on the Closing Disclosure?

HOA dues Example: The seller has paid the Homeowners Association Dues all the way thru the end of the year.  But you are buying the house today, and will own if through the end of the  year, so you own the seller back the amount of HOA dues form today through the end of the year.  On the closing disclosure, we will show a deduction from the buyer’s side of that pro-rated amount of HOA dues, and a credit to the sellers’ side.  That si an example of a pro-ration.

Taxes Example: If the seller has already paid taxes, then you as the buyer owe the seller back the prorate share of taxes for those number of days left in the year.

Rents example: If you’re buying a rental property and close on day 10 of the month, the seller gets the amount of that monthly rent equal to the first 10 days, and you as the buyer get the rent amor the 11th-the end of the month. 

The bottom line of pro-rations is, that they make sure that each party (buyer and seller) only pay for the fees/taxes/etc. associated with the home, for the portion of the year in which they own that home.  The settlement agent enters the amounts and periods into its’ software, and it makes these pro-ration calculations and prints the resulting, accurate-to-the-day pro-rations on the closing disclosure.  They are labeled and the dates are shown as well.