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I'm Cheryl, and today, we’re cracking open a deceptively simple line on your closing disclosure—tax prorations. You’d think with all our fancy software and calculators, this would be easy by now, right?
It’s not.
So I'm going down this rabbit hole, because last week I got a call to provide a buyer (and friend) with some more information on a real estate transaction happening in Texas. She noticed that the seller is currently receiving a Senior Citizen's discount on their tax bill and she was concerned about receiving a fair tax proration and worried about the risk of receiving an additional tax bill later in the year when the discount was removed.
Of course, she asked the title agency about this first and their response was… "As far as the taxes go, if the sellers are on a payment plan than everything will be paid for that year at closing. I would recommend calling the tax office with tax related questions as they will be able to better assist you."
That was obviously not helpful.
So she called the tax office. The folks at the assessor's office didn't have any idea if she'd be assessed an additional bill later in the year.
Also not helpful.
Folks, we've GOT to do better!
So let’s talk about why prorations are STILL confusing as hell, where agents get tripped up, and how to avoid post-closing drama like a boss.
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🧩 The Myth of “The Software Handles It”
“Every new processor hears it. ‘Don’t worry, the software does the math.’
Cool. Until someone at the table asks, ‘Wait, why am I paying that?’
And you’re sitting there thinking, ‘Uhhh… line 210 just says so?’”
Let’s break that myth right now: Yes, the software does spit out a number. But if you don’t know what that number means—or what assumptions went into it—you’re just crossing your fingers and hoping the closing table doesn’t turn into a courtroom.
Here’s the deal: most closings run just fine… until they don’t.
Maybe you always charge the current year taxes to the seller on page 2 and prorate a credit on page 1, but this seller isn't having it.
Maybe the buyer shows up with their dad who’s a CPA and wants to see “the math.”
Or maybe you’re doing a courtesy signing on location (without WiFi) and your assistant is on vacation when a calculation error is discovered.
Now it’s your face they’re staring at. And suddenly, “the software always does it” isn’t quite the confident answer you thought it would be.
🎯 You don’t have to be a tax expert. You don’t even have to memorize formulas.
But you do need to understand what goes into a proration—so you can explain it in plain English when someone asks, “Wait, how did we get that number?”
Because I promise you this: The one time you don’t double-check what the system calculated? That’s the one time the seller brings their cousin the attorney to closing.
🔧 Solution Nugget:
"You don’t need to be a tax attorney. You just need to understand how to break it down in plain English—and catch it when the system spits out garbage."
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💣 The Mistakes That Cause Post-Closing Explosions
“You know what title agents don’t love?
Getting yelled at 90 days later because the buyer got a surprise tax bill.”
And yet… here we are.
You think the file is done. The ribbon has been cut. The keys are in the buyer’s hands and your phone is finally quiet. Then BAM—three months later, your phone rings with that familiar tone of confusion, panic, and barely-contained rage:
“WHY am I getting a tax bill when I already paid at closing?!”
Cue the unraveling.
Let’s talk about the greatest hits of tax proration disasters:
Wrong tax year used: It’s January. You prorated for last year’s taxes—but this year’s bill is higher. Now the buyer’s paying the difference and wants blood.
Ignored leap year: It’s one extra day. Big deal, right? Tell that to the auditor when the math’s off and your reconciliation report has a mystery $9.72 discrepancy.
Seller exemptions not accounted for: Like my friend in Texas—seller gets a senior exemption, but the buyer doesn’t. The title agent prorates based on the discounted bill. The exemption gets revoked - for the entire year - 181 days post-closing. And now guess who’s holding a bill for the back taxes?
Day of closing drama: In some locations the buyer pays. Others the seller. Local customs can shift from one state to another, one county to another, and even from town to town. Some companies don’t even have a policy. So every closer just flips a coin and hopes nobody complains.
It’s these kinds of errors—tiny missteps that feel harmless in the moment—that blow up later when everyone’s already spent 5 hours arguing about the scratch on the door, the trash in the garage, and whether or not the seller agreed to leave the 5 foot rooster statue in the front yard.
🔧 Solution Nugget:
A quick mental checklist goes a long way.
What’s paid? What’s not? What changed?
Who had an exemption? Who’s responsible for closing day?
And most importantly—who’s going to get screwed if we miss this?
Don’t leave it to chance. Don’t leave it to “what the software said.”
Because the ONE Question Every Title Agent Should Be Able to Answer is:
"Wait, why am I paying that?"
Nobody likes a title agent who can't explain the closing disclosure with confidence and clarity.
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🤝 Be the Person Who Gets It Right
"Tax proration doesn’t have to be this black box of weird math.
You can learn it. You can explain it. And you can protect your clients from surprise costs and post-closing nonsense."
Want a tool that makes you look like the most helpful, tech-savvy title agency in town?
Or a guide that trains your new hire before they torch the CD?
👀 We’ve got something for that. Actually a few somethings…
First up is WickedSplit, a new Tax Proration Calculator on our website. It's free to use and can bail you out of a jam at the settlement table where all you have is a pen, paper, and your phone. Instead of breaking out your general calculator and hoping you remember how it all works, bookmark this tool at WickedTitleForum.com/wicked-title-tools for emergency use.
We've also bundled up this awesome calculator so you can rebrand it, put it on your website, and claim you're the most tech savvy title agency in town. It will be our little secret that all you had to do was copy/paste some text on your website and like magic this awesome piece of tech appeared!
And finally, we created a step-by-step training manual to help you onboard new staff and level up your customer service skills. It breaks down the tax proration calculations, piece by piece, so you're staff will understand exactly what's happening behind the scenes in your software and be able to troubleshoot errors with ease.
And while you’re at it, share this article with the processor who always asks you how to do it. We all have one.
Until next time—stay wicked, stay informed, and don’t forget the seller pays for day of closing… or was that the buyer?
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Stay Wicked,
Cheryl
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The Wicked Title Forum is a crowd-sourced resource. To help us keep our information current and correct, please comment below with any corrections or updates and we will update the article accordingly.
All sample forms should be carefully reviewed for federal & state regulatory and underwriter compliance.
The information provided here (including, but not limited to instructions, steps, or forms) is for general guidance and educational purposes only. I am not an attorney and am not giving legal advice. Information should not be considered legal, underwriting, or financial advice and is followed at your own risk. Readers should consult with their attorney and/or underwriter to obtain advice tailored to their specific circumstances.
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