Tip 41-2013: Propane/Fuel Oil Proration & Closing Delays

As the colder weather sets in, Tucker's Tip would like to remind all parties that it is necessary to address propane on a property well before closing. Paragraph 9 of the VAR Contract of Purchase provides that the "Purchaser agrees to pay Seller for all fuel, oil and/or propane remaining in the tank at the prevailing market price as of date of settlement."

Sometimes the parties to the closing forget about the propane purchase until the last minute, which may cause a delay at the closing table. A good practice is to make sure that everyone involved with the closing is aware that there is propane or fuel oil which needs to be prorated. This information should be provided at the very beginning of the contract negotiations and passed on to all parties, including the settlement attorneys and the lenders involved in the transaction. In fact, telling the lender for the first time a few days before closing that the fuel charge needs to be included on the HUD is a great way to delay a closing. If the propane charge needs to be on the HUD, the lender needs sufficient time to verify the additional cash to close for the propane.

As the measurement of the propane or fuel oil does not occur until just before closing, it is a good idea to keep reminding everyone that the propane bill will be coming. Also, please provide everyone with written proof of the amount for the propane proration.

 
Contact me at 434-951-0858 or Tucker@TGBLaw.com if you have questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, VA\
434-973-7474
www.TGBLaw.com