prorations

Definition

The closing day arithmetic splitting property expenses and income between buyer and seller based on ownership periods. It's the financial equivalent of splitting a restaurant check by who ordered what.

Example Usage

The settlement statement showed prorations for property taxes, HOA fees, and prepaid rent, crediting the buyer $2,847.

Origin

From Latin 'pro rata' meaning proportionally, standard in real estate closings since formalized settlement procedures emerged

Fun Fact

Proration disputes over who pays for the closing day itself have generated enough arguments to keep escrow officers employed since forever.

Source: Real estate closing and settlement terminology

Related Terms

Beginner

Property Tax

The annual reminder from your local government that you don't really own your home -- you're just renting it from the county with extra steps. Miss a payment and find out who the real landlord is.

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Advanced

synthetic lease

A complex financing structure that acts like a lease for accounting purposes but provides tax benefits of ownership, beloved by corporations and their accountants. It's the financial engineering equivalent of having your cake while also writing off the ingredients.

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Intermediate

contingencies

The 'what if' scenarios that keep project managers up at night and pad contracts with extra zeros. In real estate, these are the escape clauses buyers insert into offers like 'contingent on inspection' or 'contingent on not discovering the basement is haunted.' Essentially, it's the professional way of saying 'but only if everything goes according to plan,' which it never does.

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Beginner

PCM

Per Calendar Month—the rental industry's way of stating the bleeding obvious about monthly payments, because apparently 'monthly' wasn't clear enough. Commonly seen in real estate listings alongside other redundant acronyms designed to make basic concepts sound more professional. The 'ATM machine' of property jargon.

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Intermediate

rezoning

When city planners wave their magic zoning wands and declare that your neighbor's residential lot can suddenly become a mini-mall, or vice versa. It's the bureaucratic process of changing what you're legally allowed to do with a piece of land, often involving endless public meetings where everyone argues about traffic and property values. Democracy in action, one variance hearing at a time.

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Intermediate

construction loan

Short-term financing for building or renovating property, typically disbursed in stages as construction progresses rather than all at once. It's banking's trust exercise, betting you can actually finish the project before the money runs out.

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