What is the term for the process of dividing ongoing expenses like taxes and POA fees between the buyer and seller at closing?

Prorating is the correct term for dividing ongoing expenses such as taxes and property owners association (POA) fees between the buyer and seller at closing. This process ensures that both parties are fairly responsible for the costs incurred during the period of ownership. Typically, expenses that are billed on an annual basis are adjusted to reflect the exact amount that each party owes based on the date of the transaction.

For instance, if a property is sold partway through a tax year, prorating will determine how much of the tax bill the seller is responsible for based on the time they owned the property, while the buyer will be accountable for the remainder. This is essential for ensuring that neither party is unfairly burdened with the costs that the other is responsible for.

The other terms do not accurately describe this specific process. Assessing relates more to the evaluation of property value rather than expense division. Collecting expenses generally refers to the action of gathering payments rather than the method of dividing them. Accounting can encompass various financial calculations but is broader and does not specifically denote the division of ongoing expenses at closing.