Apportionment
The term apportionment can be easily applied to many contexts. For example, apportionment in insurance is concerned with how the loss is allocated between two or more insurance companies that collaborated to ensure property or asset. However, in the real estate market, when we talk about apportionment, we refer to the allocation of property expenses that are divided between the buyer and seller during a real estate transaction.
What does Apportionment Mean?
As mentioned above, apportionment is the distribution of costs between the buyer and seller, but this is a bit more complex than you might expect. During a real estate transaction, there are several categories of costs that need to be divided. Firstly, there are tax apportionments that require separate tax notices to be generated for each individual based on the timeline of ownership. Rents can also be apportioned for renters who paid in advance and vacated a property before the deadline.
Basically, the term apportionment comes from French, and the apportionment meaning is the distribution of something in proper shares. Most commonly used in law, apportionment refers to the distribution of benefits, liability. From a strictly legal perspective, the apportionment can be calculated based on time or based on estate.
Apportionment of estate
Based on estate, the apportionment can result from the act of the parties involved or the law’s operation. An evicted renter is required to pay the amount of rent charged for the time spent in the property prior to eviction, which was an act of the party. However, suppose the renter is evicted because of an act by the law as an instance of eminent domain or an act of God. In that case, the situation is reversed, and we have apportionment from the operation of the law.
Apportionment of time
Based on time, the apportionment can be of rent. If sometimes, before the payment of rent, the renter or landlord dies, or any other type of modification in the parties’ positions happens.
What is Apportionment in Real Estate?
The primary type of apportionment encountered by buyers and sellers is the one that affects costs during a real estate transaction. The parties involved in the transaction will usually split the expenses generated by the property during the month in which the real estate transaction occurs. Here we can refer to taxes, maintenance costs, insurance, and so on. The reason for which this is done is to ensure that the property taxes gained by the local government in portion before the closing date, but were not paid, will be covered by the new owner of the property during the transaction in the form of a credit against the price for which they purchased the property.
Popular Real Estate Terms
(1) A persons permanent and legal place of residence. While an individual may have one or more residences, it is only possible to have one permanent address. (2) The state where one has ...
“What is Situs?”, you ask.Situs is a word in Latin that basically means the site or location where something exists or originates. Like most words in latin, situs is usually ...
Party that receives part or all of a construction job to do from the general contractor. ...
Sometimes, a perplexing legal term (a genuine headscratcher) emerges when buying or selling a property. You know you should know it, but its precise definition escapes you. Today's special ...
Increasing tax rates with increasing levels of taxable income. ...
The amount of inherent risk for a mortgage in granting a mortgage. An operating principle in mortgage risk rating is that the mortgage cannot exceed 2.5 times the mortgagor's annual income, ...
Written enumeration of the desired selling prices associated with homes or office buildings for sale. The prospective buyer can then determine if the properties for sale are within his ...
One's given name at birth including a first name, a possible middle name, and a surname. The legal name must be used to legally sign documents, deeds, or contracts. ...
Rule within the Internal Revenue Code applicable to capital gains from selling real estate that has been depreciated for tax purposes. Most buildings must be depreciated using the ...
Have a question or comment?
We're here to help.