Which term refers to the division of costs between a buyer and seller based on time of use?

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Study for the University of Central Florida REE3433 Real Estate Law Exam. Engage with flashcards and multiple choice questions, with hints and explanations for each question. Prepare effectively for your test!

The term that refers to the division of costs between a buyer and seller based on time of use is "prorations." In real estate transactions, prorations are commonly used to allocate expenses such as property taxes, homeowner association fees, and utilities between the buyer and the seller. This allocation is typically based on the date of closing and the time each party owns the property during the billing period.

For example, if property taxes are due for the entire year and closing occurs halfway through that year, the seller would be responsible for their portion of the taxes for the time they owned the property, while the buyer will be responsible for the remaining portion. This ensures that both parties fairly share the costs based on their actual time of ownership.

Understanding prorations is essential for real estate professionals and buyers to ensure a smooth transaction process and to avoid disputes regarding financial obligations after the closing.