The Real Estate Encyclopedia & Blog

Prepaid Items

by | Feb 6, 2026

In real estate transactions, prepaid items are property related expenses that have been paid in advance by one of the parties. These expenses commonly include property taxes, insurance premiums, rent, and similar charges.

At the time of sale or closing, prepaid items are typically prorated between the buyer and seller to reflect each party’s period of ownership. This proration ensures that each party pays a fair share of the expenses based on the time the property is owned or occupied.