New Jersey Real Estate Practice Exam Free Practice Question
Which of the following items would be prorated at closing with the credit going to the seller?
Correct Answer: D
Rationale: At closing, unearned rent collected in advance is prorated with a credit to the seller because it represents income the seller has received for a period they will not occupy the property. This ensures the buyer does not pay for rent that has already been prepaid.
Option A, accrued interest on an assumed mortgage, is typically a debit to the seller as they owe interest up to the closing date.
Option B, prepaid property taxes, would generally be a debit to the seller since they have already paid taxes for a period beyond closing.
Option C, earnest money, is not prorated; it is a deposit that becomes part of the purchase price at closing.
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