What type of expenses does proration involve?

Proration involves expenses that are prepaid or paid in arrears because it refers to the division of certain costs between parties based on their share of time or responsibility for those expenses during a specific period. In real estate transactions, proration is commonly used to ensure that buyers and sellers each pay their fair share of costs such as property taxes, homeowners' association fees, and utility bills that may cover time periods that extend beyond the closing date.

For example, if property taxes are paid annually in advance and the closing occurs halfway through the tax year, proration will calculate how much of the tax the seller owes up to the closing date and how much the buyer will be responsible for after that point. This ensures a fair allocation of expenses, aligning with the concept of equity in property transactions.

The other types of expenses mentioned, such as tenant evictions, maintenance costs, and closing costs, may not uniformly require proration as they do not necessarily involve dividing costs observed over a specific time frame or based on ownership periods. Thus, they do not fit within the framework of expenses that proration specifically addresses.