Closing Prorations: Taxes, HOA, Utilities in Florida

Section 01The 60-second version

Prorations split shared charges so each party pays only for the period during which they owned the property. The largest and most counter-intuitive line is property tax: in Florida, the seller has not yet paid the current year's tax bill at the time of a typical closing, because Florida bills in November and gives the discount through November. The seller therefore credits the buyer at closing for the seller's share of the year-to-date tax, and the buyer later pays the full bill. HOA or condo fees, special assessments, CDD bonds, prepaid insurance, mortgage interest, and utilities are also prorated, each with their own logic. The estoppel certificate is the document that drives the HOA or condo proration. Calculations use a 365-day basis. A re-proration clause in the FAR/BAR contract (Standard K, formerly Paragraph 18(K)) lets either party request adjustment when the actual current-year tax bill arrives.

Section 02What prorations are, in plain language

A real estate closing is a single moment in time, but most of the costs of owning a property accrue continuously: a tax year covers 12 months, an HOA fee covers a month or a quarter, a homeowners insurance policy covers a year, a mortgage loan accrues interest daily. Closing in the middle of any of these periods means one of the parties has either paid for time the other will own, or has not yet paid for time they did own. A proration is the arithmetic that makes each party whole.

The settlement agent (in Florida, usually a title company or a real estate attorney) calculates each prorated item, applies it to the closing statement (also called the ALTA Settlement Statement or, for federally-related residential transactions, the Closing Disclosure), and adjusts the cash that changes hands at closing. The buyer's cash to close goes up or down. The seller's net proceeds go up or down. Nothing about prorations is paid outside of closing.

Two timing facts drive everything that follows.

First: in Florida, real estate taxes are paid in arrears. The county property appraiser sets values as of January 1 each year, the TRIM notice is mailed in August, the tax bill is mailed by the county tax collector on or about November 1, and the bill is due by March 31 of the following year, becoming delinquent April 1. By the time a typical resale closes (especially between January and October), the current year's bill has not yet been issued. The seller has not paid it. The buyer will pay it after closing. The proration is the seller's way of giving the buyer credit at closing for the months the seller owned during the tax year.

Second: in Quebec (the Canadian reference for this guide) and in most Canadian provinces, municipal and school taxes are paid in advance. The municipality bills before March 1 each year for the calendar year, in one or several installments. By the time a resale closes in mid-year, the seller has typically already paid for the entire year. The notary handling the closing reimburses the seller for the period after possession that the buyer will own. Proration runs in the opposite direction.

This single difference (arrears vs advance) is the most common source of confusion for Canadians who have sold property in Quebec or Ontario before and now sell in Florida. The line item exists in both jurisdictions, but the cash flow direction is reversed.

Section 03The FAR/BAR proration rule (the contractual basis)

Almost every Florida residential resale uses one of two near-identical forms published jointly by Florida Realtors and The Florida Bar: the Residential Contract for Sale and Purchase (the standard form) or the "AS IS" Residential Contract for Sale and Purchase. Both contain a Standards section near the back, in which Standard K (titled "Prorations; Credits") sets out the default proration rule.

Three operational consequences flow from that wording.

The seller is responsible for charges through the day before closing. The buyer is responsible from the closing day forward. If closing occurs on July 14, the seller's tax share runs January 1 to July 13 (194 days, in a non-leap year) and the buyer's share runs July 14 to December 31 (171 days). The buyer is the owner of record on closing day.

A 365-day basis applies. Annual charges are divided by 365 (366 in a leap year) and multiplied by the number of days in each party's window. Some title companies still use a 360-day basis for older or commercial transactions, but the FAR/BAR default is calendar days, and the closing statement should make the basis explicit.

Estimated taxes are used when the current year's bill is not yet available. The contract specifies that taxes are prorated based on the current year's tax bill if available; if the current year's millage is set but the assessment is not, the prior year's millage and current assessment are used; and if neither is available (the typical situation for closings between January and October), prior year's tax is used as the estimate. Either party may, at any time after closing, request a re-proration when the actual current-year bill is issued.

Section 04Why this is structured as a credit, not a payment

When property taxes are paid in arrears, the seller has occupied the property for some portion of the tax year without yet paying anything for that period. At closing, the seller is leaving and will not be on title when the November bill arrives. The buyer will be on title and will pay the entire bill out of pocket several months after closing. The proration accounts for the seller's months by giving the buyer a dollar credit equal to the seller's pro-rata share of the estimated annual tax. On the closing statement, this appears as a debit to the seller and a credit to the buyer. The seller's net proceeds go down; the buyer's cash to close goes down by the same amount. The seller has effectively pre-paid the buyer for the buyer's later cash outlay to the tax collector.

A Canadian who has sold in Quebec is used to seeing the opposite mechanic: the seller has already paid the full annual tax, and the buyer reimburses the seller at closing for the post-possession months. In Florida, the seller does not get reimbursed; the seller credits the buyer.

Section 05What this means specifically for a Canadian seller

This has two practical consequences at closing.

The proration is usually based on a tax figure that already reflects full taxation, which means the prior-year-bill estimate the closing agent uses is reasonably close to what the buyer will actually owe. Canadians do not have the worst-case scenario of the Save Our Homes cap collapsing on transfer (because the cap was never theirs).

But the buyer's situation matters. If the buyer is a US resident who plans to occupy the property as a primary residence and apply for homestead next year, the buyer's future tax bills will be lower than the seller's. The proration at closing still uses the seller's (higher) historical tax as the estimate. The buyer's actual current-year bill in November will normally come in close to that estimate, since the homestead exemption applies prospectively from the next assessment year. No re-proration windfall typically arises in this direction.

The reverse case (a Florida-resident seller with homestead selling to a Canadian non-resident buyer) is far more common as a re-proration trigger and is covered in detail in the related guide on the Save Our Homes cap and assessment recalibration. For a Canadian seller, the relevant takeaway is that you are unlikely to be caught by a large post-closing re-proration on your own taxes, but you should still preserve the right to one in the contract.

Section 06The re-proration clause (Standard K)

In practice, when the November bill arrives and shows a material difference from the prior-year estimate used at closing, either party may demand a recalculation. The contract does not specify a procedural mechanism; the requesting party typically writes to the other with both bills attached and a recalculation showing the delta. If the other party refuses, the only remedy is litigation, which rarely makes economic sense for small adjustments.

A Canadian seller who has left the United States and converted USD proceeds to CAD has an additional reason to plan for this. A re-proration demand from the buyer arriving in early December 2026 against a closing that occurred in May 2026 means USD owed back to the buyer, after the FX has already been booked. Some Canadian sellers retain a small USD reserve for 12 months post-closing precisely for this purpose.

Section 07HOA and condo association fees

If the property is in a homeowners association (HOA, governed by F.S. Chapter 720) or a condominium owners association (COA, governed by F.S. Chapter 718), monthly or quarterly assessments are prorated. The basis for the proration is the estoppel certificate.

The estoppel certificate states the regular periodic assessment, the date through which it has been paid, the next installment due date and amount, any delinquencies, any special assessments due or pending, transfer fees, capital contribution fees, open violations, and rights of first refusal. The closing agent uses this to calculate exactly how much of the current month or quarter the seller has paid for, what portion is owed back to the buyer, and what unpaid balances must be cleared from the seller's proceeds at closing. Past-due association balances are paid out of the seller's proceeds. The buyer is not personally responsible for the seller's pre-closing arrears, provided the closing agent obtained an estoppel certificate. The estoppel certificate fee is most often paid by the seller (under the FAR/BAR default), although the contract permits the parties to allocate it differently.

For the mechanics of estoppel certificates and the broader HOA and condo disclosure regime, see the related guide Estoppel Letter: HOA and Condo Sales.

Section 08Special assessments and CDD bonds

Beyond regular HOA fees, two further categories are commonly prorated.

Special assessments by the association: levied for capital projects (roof replacement, structural milestone repairs under SB-4D, asphalt resurfacing). The estoppel certificate must disclose any pending or due special assessments. The FAR/BAR contract Standard M (Special Assessment Liens) treats certified, confirmed, and ratified special assessment liens as of closing as the seller's responsibility; pending liens are assumed by the buyer. This often becomes a negotiation point on Florida condos.

CDD assessments under F.S. Chapter 190: many master-planned Florida communities have a Community Development District that finances initial infrastructure (roads, utilities, drainage) by issuing bonds. The CDD assessment appears on the annual property tax bill as a non-ad-valorem assessment and is therefore prorated alongside ad valorem tax under FAR/BAR Standard K. CDD assessments often have two components: an operations and maintenance portion (recurring, prorated) and a debt service portion (a long-term bond, generally also prorated annually until paid off). A Canadian seller of a CDD-encumbered property should ensure the closing statement separates ad valorem tax, CDD operations, and CDD debt-service line items, because the buyer's future budget will depend on them.

Special district assessments under F.S. Chapter 189 (fire, solid waste, mosquito control, etc.) are prorated by the same mechanism.

Section 09Mortgage interest, insurance, rents, utilities

Mortgage interest. If the seller has a mortgage on the property and is paying it off at closing, the lender's payoff statement will include interest accrued through a specific date. There is no proration with the buyer. If the seller had pre-paid interest as of the last monthly payment, no adjustment is needed; the payoff lender accounts for it. The buyer's lender (if the buyer is financing) will collect prepaid interest from the closing date through the end of the closing month as part of the buyer's prepaid items, separate from any proration.

Homeowners insurance. The FAR/BAR Standard K provides that the buyer has the option of taking over the seller's existing policy if it is assumable; in that case, the unused premium is prorated. In practice, most buyers obtain their own new policy and the seller cancels the existing one and receives a refund of unearned premium directly from the carrier (subject to short-rate cancellation penalties on some policies). Flood insurance under the National Flood Insurance Program is assumable and is sometimes prorated for that reason; private flood policies vary.

Rents. If the property is sold subject to an existing lease, the prorated rent for the closing month and any advance rent or security deposits held by the seller are credited to the buyer. The seller transfers possession of the security deposit to the buyer outside the closing arithmetic, but the deposit appears as a credit to the buyer on the settlement statement. For a Canadian seller of a rented Florida property, this often coincides with a final reconciliation under any short-term-rental platform held funds.

Utilities. Electric, water, gas, internet, and similar services are not usually prorated through the title company. The seller cancels accounts effective on the closing date and pays final bills directly. Some condo associations bundle water with the monthly assessment, in which case it is captured on the estoppel and prorated with the HOA fee. The closing agent rarely contacts utilities directly. For a Canadian non-resident seller without a US mailing address, arranging final-bill delivery (often by email or to a US-based agent) is a small but recurring problem to solve in advance of closing.

Section 10CA ↔ FL comparison: closing prorations

Section 11Worked example (Canadian seller)

A Canadian seller is closing on June 30, 2026 on a non-homestead single-family home in Palm Beach County. The 2025 tax bill (paid in November 2025 with the 4 percent early-payment discount) was 11,400 USD before discount and 10,944 USD after. The HOA monthly fee is 380 USD, paid on the first of each month. The seller's homeowners insurance was renewed January 15, 2026 at an annual premium of 4,800 USD. The seller is paying off a mortgage with a payoff statement good through July 2, 2026 carrying daily interest of 92.50 USD. There is no CDD on the property and no rental in place.

Property tax proration. Estimate based on the prior-year (2025) bill before discount: 11,400 USD ÷ 365 = 31.23 USD per day. Seller's days: January 1 to June 29 = 180 days. Seller's share: 180 × 31.23 = 5,621.40 USD. Closing statement: debit seller 5,621.40 USD, credit buyer 5,621.40 USD. The buyer will pay the 2026 bill in November 2026 in full, with the 4 percent discount available if paid in November 2026 directly to the Palm Beach County Tax Collector.

HOA proration. The June 2026 fee of 380 USD was paid by the seller on June 1. June has 30 days. Seller's days in June: 1 to 29 (29 days). Buyer's days: 30 (1 day). Buyer reimburses seller: 380 ÷ 30 = 12.67 USD per day × 1 day = 12.67 USD. Closing statement: credit seller 12.67 USD, debit buyer 12.67 USD. (If the seller had not paid June, the calculation would invert and the unpaid balance through June 29 would be paid out of seller's proceeds per the estoppel certificate.)

Insurance. The seller cancels the existing policy effective June 30 and receives the unearned premium refund directly from the carrier. No proration on the closing statement. Approximate refund (assuming pro-rata cancellation, not short-rate): 4,800 ÷ 365 × (365 minus 167 days elapsed) = 4,800 × 198 ÷ 365 = 2,604 USD, paid by the carrier outside closing.

Mortgage payoff and interest. The lender's payoff statement is good through July 2; the closing agent wires payoff funds on June 30. Interest reduction for two unused days: 92.50 × 2 = 185 USD, deducted from the wired payoff (or refunded by the lender if overpaid). No buyer-side proration.

Utilities. Seller calls the electric, water, and internet providers to cancel effective June 30 and pays final bills directly. No closing-statement entry.

Net effect on the closing statement, prorations only:

The seller's net proceeds drop by 5,608.73 USD because of prorations alone. The buyer's cash to close drops by the same amount. The buyer will pay the November 2026 tax bill in full when issued.

Section 12Common mistakes

1. Confusing the FAR/BAR cutoff with the closing day. Items are prorated through the day before closing under Standard K. Sellers who assume they pay through closing day inclusive will reconcile their numbers wrong. The buyer is the owner of record on the closing day for proration purposes.
2. Treating the proration as the final tax bill. The proration is an estimate, almost always based on the prior year's bill. The actual current-year bill issued in November can differ materially, especially when the buyer obtains homestead status (lowering the future bill, but generally not the current-year bill paid by the buyer in November of the closing year).
3. Forgetting the estoppel certificate window. A Canadian seller who lists in late winter for a fast spring close should plan for the 10-business-day estoppel response window. Order the estoppel through the title company at least three weeks before the target closing date; expedited 3-business-day issuance is available for an extra 100 USD.
4. Ignoring CDD bonds in the closing statement. Buyers of master-planned community properties sometimes do not realize that the annual CDD debt-service charge will repeat for the remaining bond term (often 20 to 30 years from the original issuance). The proration captures one year of that charge; the long-term obligation remains with the property. A Canadian seller should disclose this clearly in the FAR/BAR Homeowners' Association/Community Disclosure attached to the contract.
5. Letting the homeowners insurance auto-renew. A Canadian seller sometimes leaves an autorenewal in place and is surprised when the carrier renews the policy days before closing, locking in a non-refundable short-rate premium. Cancel the renewal in writing as soon as the contract is signed.
6. Failing to preserve the re-proration right. Once funds are wired, the buyer typically loses interest in pursuing a re-proration if the November bill comes in higher than the estimate, but a Canadian seller who has already converted USD to CAD will want clean closure. Keep both tax bills (the one used at closing and the actual November bill) and confirm the closing-year delta within 60 days of issuance.
7. Treating utilities as the title company's problem. They are not. Schedule cancellations directly with each utility, with a US email or US-based agent for final bills, and reconcile yourself.

Section 13Actionable checklist (Canadian seller)

1. Pull the most recent property tax bill from the county tax collector's website. Note the gross amount, the discount used, the millage rate, and any non-ad-valorem assessments (CDD, special districts).
2. At contract signing, confirm whether the FAR/BAR Standard K default applies, or whether a rider modifies it. Confirm the contract version on the cover page (e.g., "FloridaRealtors/FloridaBar 6/7x Rev. 8/24" or ASIS-6/7x).
3. Within five business days of contract signing, instruct the title company to order the HOA or condo estoppel certificate. Confirm whether the seller is paying the certificate fee.
4. Cancel the homeowners insurance auto-renewal in writing if renewal would fall before closing. Notify the carrier of the planned closing date and request pro-rata cancellation effective on closing.
5. Notify the mortgage holder (if any) of the closing date. Request a payoff statement valid through the closing date plus three business days; confirm the daily interest rate.
6. Two weeks before closing, schedule final-meter reads or service cancellations with each utility. Provide a US email or US-based agent for final-bill delivery.
7. Review the preliminary closing statement at least 48 hours before signing. Verify: tax proration days, daily rate, basis (365), estoppel figures match the certificate exactly, mortgage payoff matches the lender's statement, no missing CDD or special district line items.
8. After closing, retain a copy of the closing statement. When the November tax bill issues, compute the actual proration. If the delta exceeds your tolerance, send a written re-proration demand to the buyer's counsel within 30 days of bill issuance.

Section 14FAQ

Does my closing statement use 360 or 365 days? The FAR/BAR contract default is calendar days (365, or 366 in a leap year). Some commercial closings and some legacy title-company practices still use a 360-day basis. Verify on the closing statement.

Who pays the estoppel certificate fee? By default under the FAR/BAR contract, the seller. The contract permits the parties to allocate it otherwise. The fee is capped at 250 USD when no delinquencies exist, plus 100 USD for expedited issuance and 150 USD if delinquencies exist (per F.S. § 720.30851 and § 718.116).

What happens if the November tax bill is higher than the estimate used at closing? The buyer pays the full bill. If the difference is material, the buyer can request a re-proration from the seller under FAR/BAR Standard K. The seller has no automatic obligation to volunteer the re-proration; it must be requested. The right survives closing.

What happens if the November tax bill is lower than the estimate used at closing? The seller can request a re-proration from the buyer for the over-credit at closing. The same Standard K rule applies in either direction.

Can I take homestead exemption credit on my proration as a Canadian seller? No. The seller's homestead status affects the tax bill, not the contractual proration mechanic. A Canadian non-resident is not eligible for homestead in any event (Article VII, Section 6 of the Florida Constitution).

What about the documentary stamp tax on the deed? That is not a proration. It is a transactional tax under F.S. § 201.02 paid by the seller in most counties (or by the buyer in Miami-Dade) at closing on the consideration. See the dedicated guide on Florida documentary stamp tax.

Can the title company in Florida act for both the seller and the buyer? The title company is not impartial. It works for the party who pays for the title insurance commitment. In most of Florida, the seller pays for the owner's title insurance and selects the closing agent; in some southern counties (Broward, Miami-Dade, Sarasota, Collier), the buyer pays. This is unlike Quebec, where the notary is by law impartial.

Does the proration adjust for the early-payment discount? The contract permits proration based on the maximum allowable discount and applicable exemptions. In practice, the prior-year-bill estimate is typically the gross (un-discounted) figure; the buyer who pays in November captures the 4 percent discount as an upside.

What if the closing date moves? Any change of closing date requires the closing agent to recalculate every prorated item. Closing-date slippage of even a few days at month-end can move HOA prorations across a billing cycle.

Editorial team