Which of the following items is usually not prorated at closing?

• A. Security deposits
• B. Prepaid insurance
• C. Accrued interest
• D. Property taxes

Answer: (A)

Verified step by step guidance

1. Understand the concept of prorated items: Prorated items are expenses or revenues that are divided between the buyer and seller based on the closing date of a transaction. These items are typically adjusted to ensure fairness in the financial settlement.
2. Review each option: Security deposits, prepaid insurance, accrued interest, and property taxes. Consider whether each item is typically prorated during a real estate closing.
3. Analyze security deposits: Security deposits are usually not prorated because they are held by the landlord or property owner and are not considered an expense or revenue that needs to be divided between the buyer and seller.
4. Evaluate prepaid insurance: Prepaid insurance is often prorated because it represents an expense that has been paid in advance and needs to be allocated based on the closing date.
5. Assess accrued interest and property taxes: Both accrued interest and property taxes are typically prorated because they represent financial obligations that are shared between the buyer and seller depending on the time of ownership.