Proration is the process of dividing recurring property expenses between the buyer and seller so each pays only for the portion of a billing period they own the home. It is calculated and reflected on the settlement statement at closing.
Commonly prorated items include property taxes, homeowners association dues, and, in some cases, prepaid utilities or rent on an income property. For example, if annual property taxes are due but the sale closes mid-year, the seller is charged for the days they owned the home and the buyer for the rest.
Proration ensures neither party overpays or underpays for shared, time-based costs. Because tax and HOA billing cycles vary, the exact figures depend on local practice and the closing date.