At the closing, certain costs are often prorated between the buyer and the seller, typically property taxes. The reason for this is because taxes are typically paid toward the end of the year for which they are assessed. Often the closing agent must use the taxes from the previous year to compute the prorations for the sale. 

Taxes are not the only costs that can be prorated, below are some other prorations that a buyer may be charged.

Homeowner Association Dues-Some homeowner associations collect monthly dues upfront while others bill quarterly or annually. Thus, if a seller has not yet paid the dues, the dues will be paid from the seller's proceeds. 

Insurance Prorations-Insurance premiums are typically paid in advance. If the buyer is assuming the seller's existing loan or buying on a land contract, a buyer might ask the seller to transfer the existing insurance policy.

Utility Prorations-While utilities are not typically prorated at closing, in certain instances if a seller doesn't pay the county or city utilities (water, sewer, garbage), then the utilities roll over to the tax assessments. This can happen many times in short sales and foreclosures because, if the seller isn't making the mortgage payments, the seller is probably not paying the utility bills, either.

It is always a good idea to do your due diligence and before signing a purchase contract, be sure to read it to find out how prorations are handled, because you might want to propose a change in the verbiage about prorations.