Real estate Q&A: Should monthly fee be prorated if I bought townhouse near end of month?

Q: I bought a townhouse last Oct. 27, and the association charged me the maintenance fee for the entire month of October, despite there being only four days left in the month. Shouldn’t the fee have been prorated? — Deb

A: Yes, but not by your new community association. People buy and sell property every day of every month, and community associations and property tax collector may not find out about the closing until days or weeks later. There is no realistic way for them to track when people are closing and prorate the fees. Also, some people pay their bills ahead of time, while others wait until the last minute.

So rather than try to keep track of this, community associations and the tax collector set their due dates monthly, quarterly, or yearly and expect the buyer and seller to work out the proration between themselves. They just expect to get paid by someone.

This all happens during the closing process. Before your closing, the closing agent does the math, crediting and debiting the appropriate parties, and lists it on the closing statement.

If you look at your closing statement, which may be called a “Closing Disclosure,” “HUD1,” or “ALTA,” depending on the details of your transaction, see these figures.

If taxes or community maintenance dues have been paid for the period, you should see a debit from the buyer and a matching credit to the seller. The funds will flow from the seller to the buyer if they have not been paid. This lets the association and tax collector be paid on their schedule while allowing the parties to the transaction to work out the proration between themselves.

For example, if your condo dues are $300 per month and the seller already paid them for the month you closed, you would pay the seller for the part of the month remaining after the closing date. If it was not yet paid, you would have to pay it in full and should have been credited funds from the seller for the part of the month they still owned the property.

Review your settlement statement, and you should see these charges and credits.

If you cannot find what you are looking for because these forms can be confusing, contact the closing agent from your transaction, who should be happy to explain it to you.