How are the Cost divided by the Buyer and Seller?
At settlement it is usually necessary to make an adjustment between buyer and seller for property taxes and other expenses. The adjustments between buyer and seller are shown in Sections J and K of the HUD 1 Settlement Statement. In the example given above, the taxes, which are payable annually, had not yet been paid when the settlement occurs on July 1. The borrower will have to pay a whole year’s taxes on the following December 1. However, the seller lived in the house for the first six months of the year. Thus, one ¬half of the year’s taxes are to be paid by the seller.