Florida Real Estate Closing Questions

Real estate closing questions are among the most challenging parts of the Florida real estate exam because they combine legal concepts, contract terms, math, taxes, prorations, and transaction procedures.

A student may understand commissions, property taxes, mortgage costs, and debits and credits separately but still become confused when those items appear together in one closing problem.

The key is to break every question into smaller steps.

Before performing any calculation, determine:

• Who is the buyer?
• Who is the seller?
• What amount is being charged?
• Has the expense already been paid?
• Who benefits from the payment?
• Who is responsible for the time period involved?
• Is the item a debit or a credit?
• Does the problem use a 360-day or 365-day year?
• Who owns the day of closing?

This guide explains the most common Florida real estate closing questions and provides practical methods for solving them.

What Is a Real Estate Closing?

A real estate closing is the final stage of a transaction in which the parties complete the requirements of the purchase contract.

At closing:

• The buyer provides the required funds.
• The seller transfers title.
• The deed and other documents are executed.
• Existing liens may be paid.
• The buyer's loan may be funded.
• Closing expenses are allocated.
• Prorations are calculated.
• Funds are distributed.
• Documents are prepared for recording.

Closing may also be called settlement.

The exact process depends on the contract, financing, title requirements, property type, and the professionals involved.

Who Conducts a Florida Real Estate Closing?

A Florida closing may be handled by:

• A title company
• A real estate attorney
• A closing agent
• A lender's closing representative
• Another authorized settlement professional

The closing agent coordinates documents, money, payoff information, title requirements, and disbursements.

The real estate broker and sales associates may help coordinate the transaction, but they should not provide legal advice or perform services reserved for attorneys.

What Does the Closing Agent Do?

The closing agent may:

• Prepare or collect closing documents
• Confirm the purchase price
• Verify deposits
• Obtain loan information
• Order payoff statements
• Calculate prorations
• Prepare the settlement statement
• Collect buyer funds
• Pay liens and transaction expenses
• Distribute commissions
• Arrange for recording
• Deliver documents after closing

Students should remember that the closing agent follows the contract and written instructions.

The closing agent does not independently renegotiate the transaction.

What Is a Closing Statement?

A closing statement is a financial summary of the real estate transaction.

It shows:

• Amounts charged to the buyer
• Amounts credited to the buyer
• Amounts charged to the seller
• Amounts credited to the seller
• Purchase price
• Loan proceeds
• Deposits
• Taxes
• Commissions
• Title expenses
• Recording charges
• Prorations
• Other closing costs

The purpose of the statement is to show how much money the buyer must bring and how much the seller will receive.

Debit and Credit Basics

Understanding debits and credits is essential.

Debit

A debit is an amount charged to a party.

It increases the amount that party must pay or reduces the amount that party will receive.

Credit

A credit is an amount in a party's favor.

It reduces the amount the party must pay or increases the amount the party receives.

A simple memory rule is:

• Debit means charged.
• Credit means received or allowed.

Buyer Debits

Common buyer debits may include:

• Purchase price
• Loan costs
• Recording charges
• Prepaid interest
• Title expenses assigned to the buyer
• Property tax proration when applicable
• Homeowners association charges
• Survey costs
• Inspection expenses
• Insurance premiums
• Escrow deposits required by the lender

The buyer is debited for the purchase price because the buyer owes that amount.

Buyer Credits

Common buyer credits may include:

• Earnest money deposit
• Mortgage loan proceeds
• Seller-paid closing costs
• Tax proration when the seller owes the buyer
• Assumed mortgage balance
• Other contractually agreed allowances

Loan proceeds are a buyer credit because they provide funds toward the purchase.

Seller Debits

Common seller debits may include:

• Existing mortgage payoff
• Real estate commission
• Seller closing costs
• Documentary stamp charges assigned to the seller
• Unpaid property taxes
• Tax proration
• Liens
• Seller concessions
• Repair credits
• Attorney or title charges assigned to the seller

Seller Credits

The primary seller credit is usually the sale price.

Other seller credits may include:

• Rent received in advance that belongs partly to the seller
• Reimbursement for prepaid expenses
• Buyer assumption of an existing obligation
• Other contractually agreed amounts

Double-Entry Closing Accounting

Many closing items appear as both a debit and a credit.

For example, if the seller owes the buyer $1,000 for property taxes:

• The seller receives a $1,000 debit.
• The buyer receives a $1,000 credit.

The same amount appears on both sides because one party is paying and the other is receiving the benefit.

However, not every item appears as a matching buyer and seller entry.

Loan costs paid to a lender may be only a buyer debit because the lender is an outside party.

The Purchase Price

The purchase price is typically:

• A debit to the buyer
• A credit to the seller

If a property sells for $350,000:

• Buyer debit: $350,000
• Seller credit: $350,000

This is one of the most basic closing entries.

Earnest Money Deposit

The buyer's earnest money deposit is typically a credit to the buyer at closing.

The buyer already paid the deposit earlier in the transaction, so it reduces the remaining amount due.

Example:

• Purchase price: $300,000
• Buyer deposit: $10,000

The buyer receives a $10,000 credit.

The buyer still owes the balance of the purchase price and other closing expenses.

Mortgage Loan Proceeds

Loan proceeds are a credit to the buyer.

If the buyer receives a $240,000 mortgage loan:

• Buyer credit: $240,000

This credit reduces the amount of cash the buyer must bring to closing.

The mortgage loan is not a seller credit merely because the seller ultimately receives sale proceeds.

Existing Mortgage Payoff

A seller's existing mortgage must usually be paid from the seller's proceeds.

The mortgage payoff is a seller debit.

Example:

• Seller mortgage payoff: $185,000

The seller is debited $185,000 because that amount is taken from the seller's funds and paid to the lender.

The payoff may include:

• Remaining principal
• Accrued interest
• Late charges
• Recording or release fees
• Other lender-authorized amounts

The unpaid principal balance and the actual payoff amount may not be identical.

Real Estate Commission

The real estate commission or brokerage compensation is generally charged according to the listing agreement, buyer agreement, purchase contract, or other compensation arrangement.

When paid from the seller's proceeds, it is a seller debit.

If a buyer is contractually responsible for a brokerage fee, the amount may appear as a buyer debit.

Students should not assume every brokerage charge is automatically paid by the seller.

Compensation is determined by the applicable agreements.

Calculating a Commission

Use the formula:

Sale price x commission rate = commission

Example:

A property sells for $425,000 with a 5% brokerage fee.

$425,000 x 0.05 = $21,250

The total commission is $21,250.

If the question asks how much an individual sales associate receives, additional information may be needed regarding:

• Brokerage split
• Team split
• Referral fee
• Transaction fee

Commission Split Example

Suppose the brokerage receives $18,000 and the sales associate has a 70% split.

$18,000 x 0.70 = $12,600

The sales associate's share is $12,600 before other expenses.

Do not calculate the sales associate's split from the sale price unless the question specifically instructs you to do so.

First calculate the brokerage commission, then apply the associate's split.

What Is a Proration?

A proration divides an expense or income between the buyer and seller based on the portion of the period each party owns the property.

Common prorated items include:

• Property taxes
• Rent
• Homeowners association assessments
• Interest
• Insurance, when permitted
• Utility charges
• Other periodic expenses

The goal is to make each party responsible for the appropriate ownership period.

The Six-Step Proration Method

Use this method for most proration questions.

Step 1: Identify the Full Amount

Determine the annual, monthly, or total charge.

Step 2: Determine the Time Basis

The problem may use:

• 360-day year
• 365-day year
• 30-day month
• Actual calendar days

Step 3: Calculate the Daily Rate

Divide the total amount by the required number of days.

Step 4: Count the Applicable Days

Determine the number of days assigned to the buyer or seller.

Step 5: Calculate the Prorated Amount

Multiply the daily rate by the number of applicable days.

Step 6: Assign the Debit and Credit

Determine who owes the money and who receives the benefit.

Who Owns the Day of Closing?

Proration questions may specify that:

• The buyer owns the day of closing.
• The seller owns the day of closing.

This instruction changes the number of days charged to each party.

Do not assume one rule applies to every problem.

Read the contract language or exam question carefully.

Paid in Advance vs. Paid in Arrears

This distinction determines who receives the debit and credit.

Paid in Advance

An expense is paid before the period of use.

Examples may include:

• Rent paid at the beginning of the month
• Certain association fees
• Certain insurance expenses

If the seller paid an expense in advance for a period that continues after closing, the buyer may owe the seller reimbursement.

The usual entry is:

• Buyer debit
• Seller credit

Paid in Arrears

An expense is paid after the period has occurred.

Property taxes are often treated as being paid in arrears in exam questions.

If the seller has owned the property during part of the tax year but the taxes have not yet been paid, the seller owes the buyer for the seller's ownership period.

The usual entry is:

• Seller debit
• Buyer credit

Property Tax Proration Example

Assume:

• Annual property taxes: $3,650
• Closing date: April 10
• Buyer owns the day of closing
• Taxes are unpaid and treated as paid in arrears
• Use a 365-day year

Step 1: Calculate Daily Taxes

$3,650 / 365 = $10 per day

Step 2: Count Seller's Days

The seller owns January 1 through April 9.

• January: 31 days
• February: 28 days
• March: 31 days
• April: 9 days

Total: 99 days

Step 3: Calculate Proration

99 x $10 = $990

Step 4: Assign Entries

Because the taxes are unpaid and the seller owes for the seller's ownership period:

• Seller debit: $990
• Buyer credit: $990

The buyer receives the credit because the buyer may later be responsible for paying the entire tax bill.

Property Tax Proration Using a 360-Day Year

Assume:

• Annual taxes: $3,600
• Closing date: May 20
• Buyer owns the day of closing
• Use a 360-day year and 30-day months
• Taxes are paid in arrears

Step 1: Daily Rate

$3,600 / 360 = $10 per day

Step 2: Seller's Days

Seller owns:

• January through April: 4 months x 30 days = 120 days
• May 1 through May 19: 19 days

Total: 139 days

Step 3: Proration

139 x $10 = $1,390

Step 4: Entries

• Seller debit: $1,390
• Buyer credit: $1,390

Rent Proration

When property is sold with a tenant in possession, rent may need to be prorated.

The direction depends on whether the rent was collected in advance or remains unpaid.

Rent Collected in Advance

Suppose the seller collected the entire month's rent before closing.

The buyer is entitled to the portion covering the buyer's ownership period.

The usual entry is:

• Seller debit
• Buyer credit

Example:

• Monthly rent: $1,500
• 30-day month
• Closing: 21st
• Buyer owns day of closing

Daily rent:

$1,500 / 30 = $50

Buyer owns days 21 through 30:

10 days x $50 = $500

Entries:

• Seller debit: $500
• Buyer credit: $500

The seller collected the money but did not own the property for those 10 days.

Rent Paid in Arrears

If rent has not yet been collected and the seller is entitled to rent for the seller's ownership period, the buyer may owe the seller when the buyer later receives the full rent.

The typical entry may be:

• Buyer debit
• Seller credit

Always analyze who collected the money and who is entitled to it.

Security Deposits

When rental property is sold, tenant security deposits may be transferred to the buyer or otherwise handled according to the contract and applicable law.

If the seller is holding a tenant's security deposit and transfers the obligation to the buyer:

• Seller debit
• Buyer credit

The buyer receives the funds because the buyer assumes responsibility for returning or properly applying the deposit.

Homeowners Association Prorations

Homeowners association or condominium assessments may be:

• Paid in advance
• Paid monthly
• Paid quarterly
• Paid annually
• Unpaid
• Subject to a special assessment

A regular assessment paid in advance may require the buyer to reimburse the seller for the buyer's ownership period.

A delinquent assessment may be charged to the seller.

A special assessment may be allocated according to the purchase contract.

Never assume who pays a special assessment without reading the question.

Special Assessments

A special assessment is a charge for a specific improvement or association expense.

Examples include:

• Road paving
• Roof replacement
• Elevator repairs
• Structural work
• Sewer installation
• Community improvements

The contract may state whether the buyer or seller pays:

• Assessments already imposed
• Assessments already due
• Assessments payable in installments
• Assessments approved but not yet billed

Exam questions may test the contractual allocation rather than a universal rule.

Prepaid Interest

Mortgage interest is commonly paid in arrears during regular loan payments.

However, at closing, the buyer may pay prepaid interest covering the period from the closing date through the end of the month.

Prepaid interest is generally a buyer debit.

Example:

• Loan amount: $240,000
• Interest rate: 6%
• Closing: June 20
• Buyer pays interest through June 30
• Use a 360-day year
• Buyer owns the day of closing

Step 1: Annual Interest

$240,000 x 0.06 = $14,400

Step 2: Daily Interest

$14,400 / 360 = $40 per day

Step 3: Number of Days

June 20 through June 30 = 11 days

Step 4: Prepaid Interest

11 x $40 = $440

Buyer debit: $440

Simple Interest Formula

Use:

Principal x rate x time = interest

Make sure the rate and time are expressed consistently.

For annual interest:

• Convert the percentage to a decimal.
• Express time as a fraction of the year.

Example:

$100,000 x 0.06 x 30/360 = $500

Discount Points

Discount points are based on the loan amount, not the purchase price.

One point equals 1% of the loan amount.

Example:

• Loan amount: $280,000
• Two points

$280,000 x 0.02 = $5,600

The points equal $5,600.

If the buyer is responsible, this is a buyer debit.

If the seller agreed to pay the buyer's points, it may appear as a seller debit and buyer credit or as another seller-paid expense, depending on the closing statement format.

Loan Origination Fees

A loan origination fee is charged by the lender for processing or creating the loan.

It is usually calculated as a percentage of the loan amount.

Example:

• Loan amount: $300,000
• Origination fee: 1%

$300,000 x 0.01 = $3,000

Buyer debit: $3,000, unless another party agreed to pay it.

Loan-to-Value Ratio

Use:

Loan amount / property value = LTV

Example:

• Loan amount: $270,000
• Property value: $360,000

$270,000 / $360,000 = 0.75

LTV = 75%

If the question asks for the loan amount:

Property value x LTV = loan amount

Example:

$400,000 x 0.80 = $320,000

Down Payment

The down payment is generally the difference between the purchase price and the loan amount, before considering closing costs and other credits.

Example:

• Purchase price: $400,000
• Loan: $320,000

Down payment:

$400,000 - $320,000 = $80,000

If the buyer already paid a $10,000 deposit, the remaining amount toward the down payment would be $70,000, before other costs.

Buyer Cash Needed at Closing

A simplified formula is:

Buyer debits - buyer credits = cash due from buyer

Buyer debits may include:

• Purchase price
• Loan costs
• Prepaid items
• Recording costs
• Title costs
• Prorations owed

Buyer credits may include:

• Loan proceeds
• Deposit
• Seller concessions
• Tax credits
• Other allowances

Buyer Cash Example

Assume:

Buyer Debits

• Purchase price: $350,000
• Closing costs: $6,000
• Prepaid interest: $600

Total debits:

$356,600

Buyer Credits

• Mortgage loan: $280,000
• Deposit: $15,000
• Seller credit: $5,000

Total credits:

$300,000

Cash due:

$356,600 - $300,000 = $56,600

The buyer must bring $56,600, subject to final adjustments.

Seller Net Proceeds

A simplified formula is:

Seller credits - seller debits = seller net proceeds

Seller credits often include:

• Sale price
• Reimbursements
• Other contract credits

Seller debits may include:

• Mortgage payoff
• Commission
• Taxes
• Seller closing costs
• Liens
• Concessions
• Prorations

Seller Net Example

Assume:

Seller Credits

• Sale price: $450,000

Seller Debits

• Mortgage payoff: $240,000
• Commission: $22,500
• Seller closing costs: $4,000
• Tax proration: $3,500
• Repair credit: $2,000

Total seller debits:

$272,000

Net proceeds:

$450,000 - $272,000 = $178,000

The seller receives $178,000 before any additional adjustments.

Documentary Stamp Taxes

Florida real estate exam questions may test taxes associated with deeds and financing documents.

Students should distinguish among charges involving:

• Deeds
• Promissory notes
• Mortgages
• Other written obligations

The applicable rate or allocation may depend on the transaction and current law.

Because statutory rates and local surtaxes can change, students should use current Florida course materials for exact tax calculations.

Documentary Stamps on the Deed

Documentary stamp tax on a deed is generally based on the consideration paid for the property.

In many transactions, the seller is responsible by custom or contract, but the purchase agreement controls responsibility between the parties.

Exam questions may provide the applicable rate and ask for the calculation.

Use:

Taxable consideration / taxable unit x tax rate

If the tax is charged per $100, divide the consideration by 100 before applying the rate.

Documentary Stamps on the Note

Documentary stamp tax on a promissory note is generally based on the amount of the note.

The borrower is commonly responsible for financing-related taxes and costs unless the agreement provides otherwise.

Use the rate supplied in the problem or current course materials.

Intangible Tax

A nonrecurring intangible tax may apply to certain obligations secured by Florida real property.

The tax is based on the secured debt amount.

Students should use the current rate provided in their approved course materials and carefully identify whether the problem concerns:

• Sale price
• Note amount
• Mortgage amount
• Unpaid balance

Recording Fees

Recording fees are charged for placing documents in the public records.

Documents that may be recorded include:

• Deed
• Mortgage
• Satisfaction of mortgage
• Assignment
• Release
• Other instruments

The buyer commonly pays to record the deed and new mortgage, while the seller may pay to record documents needed to clear the seller's title.

However, the contract controls.

Title Search

A title search examines public records to identify matters affecting ownership.

The search may reveal:

• Mortgages
• Judgments
• Tax liens
• Easements
• Restrictions
• Ownership defects
• Probate issues
• Unreleased liens

The purpose is to determine whether the seller can transfer acceptable title.

Title Insurance

Title insurance protects against certain covered title defects.

Owner's Title Policy

Protects the buyer's ownership interest.

Lender's Title Policy

Protects the lender's security interest.

A lender's policy does not provide the buyer with the same protection as an owner's policy.

Who pays the owner's policy may depend on:

• Contract
• County custom
• Negotiation
• Closing arrangement

Students should not assume one statewide custom applies in every transaction.

Survey

A survey may identify:

• Property boundaries
• Easements
• Encroachments
• Improvements
• Setback issues
• Fence locations
• Access concerns

The survey and title search serve different purposes.

A title search examines public records.

A survey examines the physical property and boundaries.

Appraisal

An appraisal provides a professional opinion of value.

The lender may require an appraisal to determine whether the property supports the loan.

The appraisal fee is often a buyer expense, though another party may agree to pay it.

An appraisal is not the same as:

• Inspection
• Survey
• Title search
• Comparative market analysis

Inspection Fees

Inspection fees are commonly paid by the buyer.

Inspections may include:

• General home inspection
• Pest inspection
• Roof inspection
• Septic inspection
• Well inspection
• Mold assessment
• Specialized structural inspection

An inspection evaluates condition.

It does not establish title or guarantee future performance.

Property Insurance

A lender may require the buyer to obtain property insurance before closing.

The buyer may need to pay:

• First-year premium
• Initial escrow reserves
• Flood insurance
• Windstorm insurance
• Other coverage

Insurance costs can significantly affect Florida transactions.

On exam questions, identify whether the amount is:

• Prepaid
• Escrowed
• Prorated
• Paid by another party

Escrow Reserves

A lender may collect funds at closing to establish an escrow account for future expenses.

Escrow reserves may cover:

• Property taxes
• Homeowners insurance
• Mortgage insurance
• Other lender-required items

These are generally buyer debits because the buyer is funding the reserve account.

Seller Concessions

A seller concession is an amount the seller agrees to contribute toward the buyer's approved expenses.

It may be used for:

• Closing costs
• Prepaid expenses
• Discount points
• Other lender-approved charges

A seller concession is usually:

• Seller debit
• Buyer credit

The concession does not normally reduce the stated purchase price unless the contract specifically changes the price.

Repair Credits

Instead of completing a repair before closing, the seller may agree to give the buyer a credit.

Example:

• Roof repair credit: $4,000

Entries:

• Seller debit: $4,000
• Buyer credit: $4,000

The lender and closing agent may need to approve the structure of the credit.

Assumption of an Existing Mortgage

When the buyer assumes the seller's existing mortgage, the unpaid loan balance may appear as:

• Buyer credit
• Seller debit

The buyer receives credit because the buyer takes responsibility for part of the purchase price through the existing debt.

The seller is debited because the mortgage reduces the seller's equity.

Subject-To Purchase

A buyer taking title subject to an existing mortgage does not necessarily become personally liable for the debt.

However, the mortgage remains attached to the property.

For closing calculations, the unpaid balance may still reduce the cash consideration required.

Students should understand the legal difference between:

• Assuming the mortgage
• Taking title subject to the mortgage

Closing Day Calculations

A problem may state either:

• Buyer owns the day of closing.
• Seller owns the day of closing.

This affects prorated taxes, rent, interest, and assessments.

Example:

Closing on September 15.

If the buyer owns the day of closing:

• Seller's final ownership day: September 14
• Buyer's first ownership day: September 15

If the seller owns the day of closing:

• Seller's final ownership day: September 15
• Buyer's first ownership day: September 16

Always mark this before counting days.

Calendar-Day Method

Under the calendar-day method, use the actual number of days in each month.

Remember:

• January: 31
• February: 28, or 29 in a leap year
• March: 31
• April: 30
• May: 31
• June: 30
• July: 31
• August: 31
• September: 30
• October: 31
• November: 30
• December: 31

Statutory or 30-Day-Month Method

Some exam questions use:

• 360-day year
• 12 months of 30 days each

Under this method, every month is treated as having 30 days.

Do not mix actual-day counting with the 30-day-month method.

Common Closing Math Mistakes

Using Purchase Price Instead of Loan Amount

Discount points and financing charges are commonly based on the loan amount.

Reversing Debits and Credits

Ask who owes and who benefits.

Ignoring Paid in Advance or Arrears

This determines the direction of the proration.

Counting the Closing Day Incorrectly

Identify who owns the closing day before counting.

Using the Wrong Year

Use 360 or 365 days as stated.

Calculating the Correct Amount but Assigning It to the Wrong Party

A mathematically correct number can still produce a wrong answer.

Subtracting the Deposit From the Loan

The deposit is a buyer credit against total debits, not necessarily a reduction of the approved loan amount.

Confusing Loan Balance and Payoff

The payoff may include accrued interest and fees.

Applying the Commission Split Too Early

First calculate the total brokerage commission, then calculate the associate's share.

Closing Question Strategy

Use this seven-step approach.

1. Identify the Topic

Determine whether the question concerns:

• Commission
• Tax
• Rent
• Interest
• Loan
• Proration
• Seller proceeds
• Buyer cash
• Debit or credit

2. List the Facts

Write down:

• Amount
• Rate
• Date
• Time basis
• Closing-day ownership
• Paid status
• Responsible party

3. Select the Formula

Do not begin calculating until you know the correct formula.

4. Solve the Amount

Perform the arithmetic carefully.

5. Check Reasonableness

Ask whether the result makes sense.

6. Assign Debit and Credit

Determine who is charged and who benefits.

7. Review the Question

Make sure you answered what was actually asked.

Sample Closing Questions

Question 1: Commission

A property sells for $380,000. The listing agreement provides for a 5% brokerage fee. What is the total commission?

$380,000 x 0.05 = $19,000

Answer: $19,000

Question 2: Sales Associate Split

The brokerage receives $19,000. The sales associate receives 65%. What is the associate's share?

$19,000 x 0.65 = $12,350

Answer: $12,350

Question 3: Discount Points

A buyer obtains a $250,000 loan and pays two discount points.

$250,000 x 0.02 = $5,000

Answer: $5,000

Question 4: Loan-to-Value Ratio

A property is valued at $360,000, and the loan amount is $288,000.

$288,000 / $360,000 = 0.80

Answer: 80%

Question 5: Seller Net

A property sells for $500,000. The seller owes $250,000 on the mortgage, pays a $25,000 commission, and has $10,000 in other closing costs.

$500,000 - $250,000 - $25,000 - $10,000 = $215,000

Answer: $215,000

Question 6: Buyer Cash

The buyer has total debits of $420,000. The buyer has a $330,000 loan, a $20,000 deposit, and a $5,000 seller credit.

Credits:

$330,000 + $20,000 + $5,000 = $355,000

Cash needed:

$420,000 - $355,000 = $65,000

Answer: $65,000

Question 7: Tax Proration

Annual taxes are $3,600. Use a 360-day year. Closing is April 16, and the buyer owns the day of closing. Taxes are unpaid.

Daily rate:

$3,600 / 360 = $10

Seller owns:

• January through March: 90 days
• April 1 through April 15: 15 days

Total: 105 days

Proration:

105 x $10 = $1,050

Entries:

• Seller debit: $1,050
• Buyer credit: $1,050

Answer: $1,050 seller debit and buyer credit

Question 8: Prepaid Rent

Monthly rent is $1,800. The seller collected the full month in advance. Closing is on the 21st, buyer owns the day of closing, and the month has 30 days.

Daily rent:

$1,800 / 30 = $60

Buyer owns 10 days:

10 x $60 = $600

Entries:

• Seller debit: $600
• Buyer credit: $600

Answer: $600 seller debit and buyer credit

Frequently Asked Questions

What is the difference between a debit and a credit?

A debit is a charge. A credit is an amount in a party's favor.

Is the purchase price a buyer debit?

Yes. It is generally a buyer debit and seller credit.

Is the buyer's deposit a credit?

Yes. The buyer already paid it, so it reduces the remaining amount owed.

Are mortgage proceeds a buyer credit?

Yes. Loan funds are credited to the buyer.

Is the seller's mortgage payoff a debit?

Yes. The payoff is taken from the seller's proceeds.

Who receives the tax credit when taxes are unpaid?

When taxes are treated as paid in arrears, the seller is generally debited and the buyer credited for the seller's ownership period.

Who receives a credit for prepaid rent?

If the seller collected rent in advance, the buyer generally receives a credit for the buyer's ownership period.

Are discount points based on the purchase price?

No. They are based on the loan amount.

Does one point equal 1%?

Yes. One point equals 1% of the loan amount.

Who pays closing costs?

The purchase contract, loan requirements, negotiations, and applicable law determine responsibility.

Does the seller always pay the commission?

No. Brokerage compensation depends on the applicable agreements.

Is a title search the same as a survey?

No. A title search examines public records, while a survey examines boundaries and physical conditions.

Florida Closing Questions Checklist

Before taking the exam, make sure you can calculate and explain:

• Buyer debits
• Buyer credits
• Seller debits
• Seller credits
• Purchase-price entries
• Earnest money deposits
• Loan proceeds
• Mortgage payoffs
• Brokerage commissions
• Commission splits
• Buyer cash required
• Seller net proceeds
• Property tax prorations
• Rent prorations
• Association assessments
• Prepaid interest
• Simple interest
• Discount points
• Origination fees
• Loan-to-value ratio
• Down payments
• Seller concessions
• Repair credits
• Security deposits
• Mortgage assumptions
• Recording costs
• Documentary stamp calculations
• Intangible tax calculations
• Title charges
• Closing-day ownership

Final Thoughts

Florida real estate closing questions become easier when you stop treating them as one large calculation.

Break each problem into individual decisions:

1. What is the item?
2. Who owes it?
3. Who benefits?
4. Has it already been paid?
5. What time period applies?
6. Who owns the closing day?
7. Is it a debit or credit?
8. What formula should be used?

The most important rules to remember are:

• Purchase price is generally a buyer debit and seller credit.
• Buyer deposits and loan proceeds are buyer credits.
• Existing mortgage payoffs are seller debits.
• Unpaid taxes commonly create a seller debit and buyer credit.
• Prepaid expenses may create a buyer debit and seller credit.
• One discount point equals 1% of the loan amount.
• Commission is calculated from the sale price unless the question states otherwise.
• A sales associate's share is calculated after determining the brokerage compensation.
• Seller net proceeds equal seller credits minus seller debits.
• Buyer cash due equals buyer debits minus buyer credits.

Most errors occur because students reverse the parties, use the wrong figure, or count the days incorrectly.

Practice writing out every step. Do not perform the entire problem mentally. Label buyer and seller entries clearly, identify whether an item is paid in advance or arrears, and check whether the result is reasonable.

With repeated practice, Florida closing calculations can become some of the most predictable and manageable questions on the real estate exam.