Are the prorations of taxes and rents affected by a delay in Closing?

QUESTION: I represented the seller in the sale of a residential rental property that was scheduled to close last Friday. Everything was signed at the closing attorney’s office, the buyer’s loan was funded, and the buyer made their down payment, but the attorney was unable to record the deed and deed of trust until Monday because the Register of Deeds Office closed unexpectedly due to a bad storm. I just got a call from the buyer agent saying that the prorations of the real property taxes and rents have to be revised. According to the buyer agent, the definition of “Closing” in the Offer to Purchase and Contract (Form 2-T) states that Closing is not completed until the deed and deed of trust are recorded, and since the deed and deed of trust were not recorded until Monday, the prorations on the Closing Disclosure are not accurate. Is she right?

ANSWER: The buyer agent is correct that Closing isn’t completed until the deed and any deed of trust are recorded. See paragraph 1(m) of the Offer to Purchase and Contract. However, she is incorrect that the prorations of taxes and rents must be revised. Paragraph 9 of the Contract clearly states that unless the parties agree otherwise, the seller is responsible for prorated taxes on real property, rents, and owner’s association dues through the date of Settlement. “Settlement” is defined in paragraph 1(k) of the Contract as “[t]he proper execution and delivery to the closing attorney of all documents necessary to complete the transaction… and the closing attorney’s receipt of all funds necessary to complete such transaction.” In your situation, Settlement took place on Friday since the closing attorney received all the necessary documents and funds that day. Assuming the buyer and seller didn’t agree otherwise, the prorations of taxes and rents were not affected by the delay in the completion of Closing.

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