Pro rata is among those Latin terms that has been directly incorporated into English. The vernacular version of the phrase is “prorate.” Literally, the Latin term means “in accordance with calculation.” In practice, both of the original and much more common English term mean to proportion a cost over time. Both terms are often utilized in real estate, especially at sale and in the beginning or end of a rental.

Practical Application

A lot of costs related to owning or renting property are paid on a monthly or other regular term. Real estate taxes, for example, are usually due once or twice annually. Mortgages and rent are usually due each month. But not everybody starts a rental phrase on the very first of the month or buys a property on the first day of a property tax season. Monthly and periodic costs like these are often prorated to reflect the proportion of time the property is rented or owned.


A rental lease for a home states the monthly rent is $3,000 and it is due on the first of each month. The tenant and landlord agree the lease begins on Nov. 15. If a full month’s rent is $3,000, a half month’s rent would be $1,500. Within an agreement in which the rent is prorated for November, the tenant would pay $1,500 for the rent from Nov. 15 through Nov. 30. A landlord does not need to prorate rent.

Legal Definition

Some states offer a legal definition for the phrase prorate or pro rata. As an example, the Michigan Property Tax Act says that, unless otherwise agreed, real estate property taxes have been prorated as though paid ahead of the tax year period. For example, if the vendor pays land tax on April 1 to get a tax period covering July1 through June 30t and the home is offered on Oct. 1, then the purchaser must pay the vendor for the period of Oct. 1 through June 30, or about 75 percent of their tax invoice the vendor paid in April.

Importance to this most important thing

Prorating can make a big difference to closing costs to your seller and purchaser or move-in or move-out costs for a tenant and neighbor. Checking the sales contract or lease before signing on the dotted line is the first step to understanding how or whether prorating will be computed. If no mention of this term is in the contract, ask for it to be added or explained, or confirm state law dictates how it is treated. Finding out exactly what the rules are once you’re already committed to your contract is certainly the kind of surprise that you need to prevent.

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