What do accrued items refer to in real estate transactions?

Accrued items in real estate transactions refer to expenses that the seller has incurred but has not yet paid by the time of closing, which the buyer will eventually cover. This is often because certain expenses are billed or due after the closing date, but ownership has already transferred to the buyer. For example, property taxes or utility bills can be examples of accrued items. These amounts are typically prorated at closing to ensure the buyer is responsible for the portion of costs incurred after the closing date, while the seller takes care of the costs incurred before that date.

Understanding accrued items is crucial for accurately calculating adjustments during closing, ensuring that both parties pay their fair share of the expenses associated with the property. It also helps prevent any disputes regarding which party is responsible for which costs after the transaction has been completed. Other options do not accurately describe this concept; expenses incurred after closing or fees related to property inspections do not fit the definition of accrued items.