Contracts, Transfer, and Escrow Practice Question

Question

A buyer and seller disagree about a transaction term involving proration. The parties need a practical answer before moving forward. Which answer best applies the rule? (Item 18)

Answer choices

1. A. It removes the need for written disclosure if the licensee believes the client already knows.
2. B. Calculate or recognize allocation of recurring expenses at closing.
3. C. It can be ignored if the transaction is expected to close quickly.
4. D. It requires the licensee to favor the other party over the licensee’s own client.

Correct Answer

B. Calculate or recognize allocation of recurring expenses at closing.

Explanation

The correct answer is B because proration requires candidates to calculate or recognize allocation of recurring expenses at closing. The other options overstate the effect of custom, oral agreement, escrow, or independent salesperson action and do not reflect safe California exam practice.

Question details

• Difficulty: medium
• Domain: Contracts, Transfer, and Escrow
• Objective: proration

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