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Homes and Land in Sunny Sequim, Washington

Homes and Land in Sunny Sequim, Washington

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How to Prorate Propane at Closing

by Chuck Marunde / Saturday, 15 August 2015 / Published in Traps for the Unwary

How do you prorate propane at closing? When you buy a home, if the tank still has some propane in it, the seller is entitled to be reimbursed, and as a buyer you will be charged an amount on your closing statement to prorate the propane in the tank. But how does the escrow agent prorate propane? As a buyer, you should know how this works so you don’t get into an argument with a seller at the 11th hour.

Prorate Propane

How to Prorate Propane

You would think that it is super easy to prorate propane. Like anything else, you simply calculate how much the propane is worth per gallon, multiply by the number of gallons, and you reimburse the seller that amount. Unfortunately, it’s not that simple, and there’s a very logical reason.

If you call a propane distributor and ask how much propane is per gallon, you won’t be able to get a short answer. In fact, your conversation will probably be at least five minutes, and if you clarify the answers with more questions, you may be talking for 10 minutes before you understand. I know, because I’ve done this.

Prorate Propane Per Gallon

Here’s why it is hard to calculate how to prorate propane. Propane companies will quote a current retail price, which may be $2.39 per gallon. But that’s not necessarily what you will pay if you’re filling a residential propane tank. The price you pay will “depend.” It will depend on how big a propane tank you have, how often you refill it, and how long a contract you are willing to sign. There isn’t just one fee–there are multiple fee schedules based on all these variables. With three variables, that means there are nine possible fee schedules. And there’s another price they will quote. It is the first time customer price, which may be as low as $1.69 (in the current pricing model). But you’ll only see that price once. Now you know why it is so hard to prorate propane.

The standard real estate contract (Form 21) that is used in Washington states in para “h. Closing Costs and Prorations and Charges and Assessments,” the following:

Buyer shall pay for remaining fuel in the fuel tank, if, prior to closing, Seller obtains a written statement from the supplier as to the quantity and current price and provides such statement to the Closing Agent.

Everyone assumes that this language includes propane, and I won’t challenge that assumption, except to say that it is not 100% clear that propane is “fuel” in this contract. Let’s assume it is, and move on to the bigger ambiguity. The language refers to “current price,” but does not define the formula for determining what current price is. As you read above, current price can be any of multiple prices from various price schedules, and even those prices can vary from company to company. How to prorate propane is not so easy.

The local Sequim practice has been to reimburse the seller for the seller’s actual costs as calculated from his propane company. That makes sense from the seller’s perspective, but what if a buyer says, “Well, as a first time propane customer, I can get $1.69, instead of the seller’s cost (which may be $1.85 per gallon). Why should I pay the higher fee?” 

Going with the seller’s actual cost is probably the most objective approach if you have to prorate propane, but there is room for differences of opinion here. At least now, you know what to expect when it is time to prorate propane on your closing statement.

The local Propane Companies and their phone numbers are:

Sunshine Propane, (360) 683-4010
Ferrellgas, (360) 683-9029
Mountain Propane, (360) 683-1881
Propane Northwest, (360) 683-5220
Pioneer Propane, (360) 683-9988
Suburban Propane, (360) 377-7647

Possibly Related Posts:

  • Sequim Traps for the Unwary Buyer
  • Things Are Not Always What They Seem
  • Sequim Bluffs and Insurance
  • What If The House I Want to Buy Does Not Have a Building Permit?
  • How to Terminate a Transaction

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About Chuck Marunde

After practicing real estate law for 20 years in Washington, Chuck opened iRealty Virtual Brokers covering the Sequim and the beautiful Olympic Peninsula. Chuck is the author of numerous magazine and Internet articles with a primary focus on real estate. He is also the author of over a dozen books, mostly about Sequim real estate. Chuck is a photographer, videographer, and Registered FAA Drone Pilot. Chuck has combined his love for real estate and technology to create a growing Internet presence in his market, and enjoys building his websites and blogs, including SequimBlog.com and Sequim4Sale.com and LuxuryWaterViewHomes.com. Chuck has degrees in Economics, Law, and Education.

3 Comments to “ How to Prorate Propane at Closing”

  1. William McCallum says :Reply
    March 25, 2019 at 4:18 pm

    You have payed out very accurately the retail propane business. If I may inject some new information to better educate another side of the business model. There are also purchasing groups out there and coop buying groups. One such group has been successfully operating since 1998. The only way to find such groups is to ask a friend that might be connected.there are a few requirements 1) 500 gallon tank owned2) you must monitor your use and call in at around 30% 3) pay your invoice within 7 days of receiving fuel 4) no fee to join and no other costs unless you require special work on equipment or repairs. We pass along the Hazmat fee of & 9.95 for each ticket. 1,000 gallon tank owners get same discounts as 500 gallon tank owners … we all share in this approach equally.

  2. Debra E Jordan says :Reply
    May 21, 2019 at 8:08 pm

    Don’t count on it I have asked for a pro ration on the propane left in my tank and the buyer refuses to pro rate the buyers agent says too bad for you. I am not sure what else can be done but had just ordered the fill prior to accepting the buyers offer.

    Editor: Debra, the contracts we use from the Northwest MLS include language that requires the escrow agent to pro-rate the propane, so it’s part of the contract.

  3. jim simon says :Reply
    August 9, 2019 at 4:44 am

    This was really informative and helpful. thanks for sharing this.

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Chuck E. Marunde, J.D.

Sequim Buyer's Agent
(Atty Ret.)
Founder and Broker of
Sequim & Port Angeles Real Estate dba iRealty Virtual Brokers
125 Olympic Ranch Ln,
Sequim, WA 98382
(360) 775-5424
ChuckMarunde@gmail.com

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From Los Angeles

It's rare, but once in awhile life provides the perfect collaborator for an important endeavor such as buying your new home. For me that person was Chuck Marunde. His two decade background as a Real Estate Attorney, his prolific career as an author of articles and books on Real Estate and his forthright and moral character made choosing Chuck a no-brainer. Chuck is dedicated, thorough, incredible at the negotiating table, knowledgeable about all local laws & regs but, most importantly, Chuck loves what he does. And what he does is find his client the perfect property. Chuck isn't about making the sale, he's about making the sale that is OPTIMUM for his CLIENT and this makes Chuck a rare bird indeed. I love my new home in Sequim and I am indebted to Chuck for making it happen. Kevin E.

From Seattle

I’ve had the pleasure of working with Chuck over the past three years in selling my parent's estate. It was a tough time to sell during the housing recession, but Chuck always kept things on the positive side. With his real estate law background, he offers sound, practical advice. He helps you along with the process using discussions and reason, rather than opinions and speculations. If Chuck doesn’t know the answers, he will get them for you. In several instances, Chuck took the initiative to meet with county officials to get up-to-date facts about zoning and regulations. I was always impressed with his company’s tech savvy communi-cations and internet presence: weekly email updates, blogs, videos, links, Linked-in networking, etc. He is truly pioneering the future of buying & selling real estate. Brian M.

From California

"Andy Romano is a successful motion picture character actor with over 40 years in 'the Biz.' Mr. Romano has a home in beautiful Santa Barbara, California, but he chooses to live most of the time in Sequim, Washington on the Olympic Peninsula in the great Pacific Northwest. Why? In his own words, 'Because it's even more beautiful and surrounded by more beauty in this incredibly peaceful and quiet place. With respect to real estate agents or brokers, well my friend Chuck Marunde, owner of Sequim and Port Angeles Real Estate, is hands down the best there" Andy R.

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From Florida

We do our homework for the task at hand and we look for and expect to enlist partners that do the same. It was our good fortune to select Chuck Marunde of Sequim and Port Angeles Real Estate to represent us as a buyer's broker in our search for a home in the Sequim/Port Angeles area. Chuck's site is all encompassing and super fast compared to many others, he knows the market at every conceivable level and his guidance through the process of selecting and purchasing a home is priceless - above and beyond that of anyone with whom we have ever worked. Add to all this his 20 year background in real estate law and you have discovered a superb asset in the adventure of purchasing a home. Greg and Marilyn

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