Which of the following is typically considered an accrued adjustment in real estate transactions?

In real estate transactions, an accrued adjustment refers to an expense that has been incurred but not yet paid. This provides a more accurate picture of the financial obligations associated with the property at the time of the transaction.

Unpaid real estate taxes are a classic example of an accrued adjustment. These taxes are assessed based on property value but may not be due for payment immediately. If they are owed at the time of the transaction, they will need to be accounted for in the closing statement, as the seller is typically responsible for any taxes that are owed up to the closing date. This ensures that the buyer is not unfairly burdened with taxes that were accumulated prior to their ownership.

On the other hand, unpaid rent may constitute a different category of liability as it is typically associated with lease agreements rather than property ownership. Real estate commissions are typically paid at the closing and reflected immediately rather than accrued. Insurance premiums are generally paid in advance or settled at the closing and don’t qualify as accrued adjustments since they are typically prepaid.