How Is An Impound Account Adjusted?
An impound account is a sum collected in advance by some lenders and held as a deposit for such things as property taxes and fire insurance premiums. Any existing balance is normally refundable when the loan is paid off. If there is an impound account involved in a transaction, it is adjusted if the new buyer is assuming both the existing loan and the impound account balance as well. If the seller has paid these advance deposits to the lender and they have not been used for taxes or insurance, the seller must be reimbursed because the buyer is also assuming the responsibility to provide an impound account. Strictly speaking, this is not a proration, since it doesn’t divide something which has been partly used up. It is more like a savings account which transfers ownership along with the property. The seller is simply credited for the amount of the impound account, and the buyer is debited for that same amount.
