On a closing statement, what are items that have been paid in advance by the seller called?

On a closing statement, items that have been paid in advance by the seller are referred to as prepaid items. These are costs that the seller has incurred prior to the closing and can include things like property taxes, insurance premiums, or utility payments that cover periods extending beyond the closing date.

The concept of prepaid items is significant because they affect how funds are disbursed and accounted for at closing. When buyers take over ownership, they typically want to understand how these costs will impact their own financial responsibilities moving forward. Prepaid items ensure that the buyer is aware of amounts that have already been settled by the seller.

Understanding this term is crucial for both real estate professionals and consumers, as it has implications for financial planning and the overall clarity of the transaction. Other terms in the choices relate to real estate finance and regulations but do not pertain to the specific concept of advance payments that are settled prior to the actual closing, thus making prepaid item the accurate choice in this context.