What is the correct proration method for rents during a transaction?

The correct proration method for rents during a transaction involves the buyer receiving a credit for the time they will own the property. This approach ensures that expenses associated with the property, such as rent, are fairly divided between the buyer and the seller based on the closing date of the transaction.

When a property is sold and there are tenants in place, the seller typically collects rent for the entire rental period (e.g., a month). However, since the buyer will take ownership partway through that month, they should be credited for the days they will actually own the property. This adjustment protects the buyer from paying for occupancy beyond their ownership period and reflects the practical arrangement that the seller remains responsible for the property until the closing date.

By ensuring that the buyer receives a credit proportional to their ownership time, the transaction reflects a fair and equitable handling of rental income. This is crucial in real estate transactions where renters are involved, as it helps to maintain clarity on financial responsibilities.