Legal Definitions - prorate

To prorate means to divide or distribute something, such as a cost, payment, or benefit, in a fair and proportional way. This usually happens when an item or service is used for only part of a full period, or when multiple parties share a common expense or resource. The division is calculated based on the specific portion of time, usage, or share involved.

• Example 1: Rent for a Partial Month

  Imagine a new tenant moving into an apartment on the 15th of a 30-day month. The monthly rent is $1,500. Instead of paying the full $1,500 for their first month, the landlord will prorate the rent. This means the tenant will only pay for the 15 days they actually occupy the apartment. The daily rent would be $1,500 divided by 30 days, which is $50 per day. So, the tenant would pay $50 multiplied by 15 days, totaling $750. This ensures they pay proportionally for the time they are living there.

• Example 2: Shared Utility Bills

  Consider three roommates sharing an electricity bill for their apartment. One roommate moves out on the 10th of the month, and a new roommate moves in on the 20th of the same month. The electricity bill covers the entire 30-day month. To ensure fairness, the bill would be prorated. The first roommate would pay their share for the first 10 days. The two remaining original roommates would pay their share for the full 30 days. The new roommate would pay their share for the last 10 days of the month. This way, each person contributes to the utility cost only for the period they were living in the apartment and benefiting from the electricity.

• Example 3: Employee Salary for a Partial Pay Period

  An employee starts a new job on the 10th of a month, and the company's pay period runs from the 1st to the last day of the month. If the employee's annual salary is $60,000, their first paycheck will be prorated. Instead of receiving a full month's salary, their pay will be calculated based on the number of working days they actually completed from the 10th to the end of the month. The company would determine their daily rate and then multiply it by the number of days worked in that initial partial period, ensuring they are paid precisely for the time they were employed.