Per Diem: Doc Stamps, Prorations, and Cash to Close
Contract price is $412,500 for a house in Orange County. The buyer obtains a 30-year conventional loan at 80% loan-to-value and 6.5% interest. The lender charges 1.5 origination points and prepaid interest from the closing date through the end of the month. Closing is set for Monday, June 16 (not a leap year). Current-year property taxes of $4,745 are unpaid and will be prorated with the seller charged through the day of closing on a 365-day year. Earnest money of $12,000 is already in escrow, and the seller has agreed to a $4,500 closing-cost credit to the buyer. The buyer's other closing costs (title, lender fees, recording) total $3,950. The seller pays documentary stamps on the deed at $0.70 per $100, a 6% brokerage commission, $2,350 in seller closing costs, and a $198,000 mortgage payoff.
1. Compute the documentary stamp tax on the deed and the property tax proration, stating who is debited and who is credited.
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Documentary stamps on the deed: $0.70 per $100 of consideration, rounded up to the next $100. $412,500 ÷ 100 = 4,125 increments × $0.70 = $2,887.50. By Florida custom the seller pays the doc stamps on the deed (the buyer pays recording; there is no Florida doc stamp or intangible tax on the note).
Tax proration: $4,745 ÷ 365 = $13.00 per day. Days January 1 through June 16 inclusive: 31 + 28 + 31 + 30 + 31 + 16 = 167 days. 167 × $13.00 = $2,171.00, debited to the seller and credited to the buyer. Taxes are paid in arrears; the buyer will pay the entire bill in November and is credited for the seller's share of the year.
If the contract instead charges the seller only through the day before closing, use 166 days ($2,158.00). The contract and closing instructions control the convention, so state it on the settlement statement.
2. Compute the buyer's cash due at closing.
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Loan amount: 80% × $412,500 = $330,000. Down payment: $82,500.
Charges to buyer:
- Down payment: $82,500.00
- Origination points 1.5% × $330,000: $4,950.00
- Prepaid interest, June 16–30 = 15 days: $330,000 × 6.5% ÷ 365 = $58.7671/day × 15 = $881.51
- Other closing costs: $3,950.00
- Total charges: $92,281.51
Credits to buyer:
- Earnest money: $12,000.00
- Seller credit: $4,500.00
- Tax proration: $2,171.00
- Total credits: $18,671.00
Cash due from buyer = $92,281.51 − $18,671.00 = $73,610.51.
Note: if the appraisal comes in below $412,500, the lender computes LTV on the lower of price or appraised value and the down payment and points change accordingly.
3. Compute the seller's net proceeds, and explain what changes if closing slips to June 19.
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Seller's side:
- Sale price: $412,500.00
- Less doc stamps: −$2,887.50
- Less tax proration: −$2,171.00
- Less credit to buyer: −$4,500.00
- Less commission 6%: −$24,750.00
- Less seller closing costs: −$2,350.00
- Less mortgage payoff: −$198,000.00
- Net to seller: $177,841.50
If closing moves to June 19 (three days later):
- Buyer's prepaid interest drops to 12 days (June 19–30): 12 × $58.7671 = $705.21, about $176 less.
- Seller's tax proration rises to 170 days × $13.00 = $2,210.00, $39 more.
- The payoff lender adds per-diem interest for the extra days.
- If the delay crosses month-end, the buyer owes a full extra month of interest and may owe a rate-lock extension fee.
Every closing date carries a per-diem price on both sides; the contract's conventions must match the settlement statement line by line.