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WILL MY UTILITY BILLS BE PRO-RATED IN ESCROW?

“If a man has money, it is usually a sign too, that he knows how to take care of it; don’t imagine his money is easy to get simply because he has plenty of it.” – Edgar Watson Howe

At close of escrow, certain expenses will be pro-rated, giving the Buyer and Seller any credits they may be due or paying any unpaid expenses owing from either party. The pro-ration of these expenses divides up the expense fairly between the parties, determined by the length of time each party owns the property.

The typical expenses which are pro-rated are the property taxes, interest, insurance premium, rents, homeowners dues or maintenance charges. These are expenses which, if unpaid, could become a lien on the property. Utility bills, on the other hand, are not typically attached to the property but rather to the person’s name alone. Although they typically do not become a lien against the property, there are some states where this is the exception.

In some states, utility charges may become a lien against the property and thereby encumber the title. Water, sewer, and propane charges follow the title of a property and can become a lien if left unpaid. When closing a transaction, the closing agent will be very careful to verify the status of these utility bills, determining if they are paid or unpaid, and any remaining balance due. The charges will be determined and the Buyer and Seller’s proportional share will be pro-rated in escrow at the time of closing.

Verify with your closing agent if utility charges will be pro-rated in your state. If you are the Seller, providing your closing agent with your utility bills early in the escrow will save time and clear up any uncertainties at the time of closing.

If you are the Buyer, ask to verify the utility pro-rations which appear on your escrow instructions and closing statement and be certain that all unpaid bills will be paid at the time of closing. You don’t want any surprises after the close of escrow or to find an unpaid water or sewer bill that could attach to the property and become a lien against your title.

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About Mme Jocelyne

Hi, I'm a transplanted northerner–(born and raised in New York to French immigrants–Oui je parle Francais)-living in Florida for 20 years. In the 70's I worked as a realtor in the Bronx – City Island to be exact. Then I started a family and didn't keep up my license. I aspired to a career in architecture, so I went to New York Institute of Technology for three years, moved to Florida and finished my degree at the University of Florida in Gainesville. After 10 years of working in my dream career I sustained an injury to my shoulder. This injury never healed because I was constantly on the computer doing cad design. I finally decided to make a career change – something where I could use my training as an architect. Needless to say, I was worried – where will the money come from? How will I be able to afford my career change? But, I put my faith in God and went for it. It’s the best move I ever made, other than my husband, children and dogs.

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