Laura is a real estate associate assisting her buyer, Chris, in purchasing a condo in Fort McMurray for $280,000. Chris plans to assume the existing mortgage of $150,000, and pay a $50,000 deposit, with the remainder due on closing. Assuming a closing date of June 30th and possession on July 10th, and property taxes of $2,400 per year already paid in full by the seller for the entire year, how will property taxes be adjusted on the Statement of Adjustments?

Question: Laura is a real estate associate assisting her buyer, Chris, in purchasing a condo in Fort McMurray for $280,000. Chris plans to assume the existing mortgage of $150,000, and pay a $50,000 deposit, with the remainder due on closing. Assuming a closing date of June 30th and possession on July 10th, and property taxes of $2,400 per year already paid in full by the seller for the entire year, how will property taxes be adjusted on the Statement of Adjustments?

Answer options: ✅ Chris will owe the seller for taxes from July 1st to December 31st.

• The seller will owe Chris for taxes from January 1st to June 30th.
• The property taxes will be paid by Chris directly to the municipality after closing.
• No adjustment for property taxes will be made, as the seller paid them in full.

Correct answer: Chris will owe the seller for taxes from July 1st to December 31st.

Explanation: On the Statement of Adjustments, property taxes are typically adjusted as of the possession date. Since the seller paid the full year's taxes, and possession is on July 10th (meaning Chris takes over financial responsibility from July 1st), Chris must reimburse the seller for the portion of the taxes from July 1st to December 31st. The exact calculation is typically 184/365 of $2,400.