A change made to the purchase price of a property on the closing date.
Most homes have ongoing expenses associated with owning them, such as property taxes or condominium fees. Sometimes the seller will have prepaid these fees for the current month, or even for the entire year. In other cases, the seller may have outstanding fees that are unpaid.
To compensate the seller for any prepaid fees, the prepaid amount is added to the purchase price on the closing date.
Similarly, to compensate the buyer for any unpaid fees, the unpaid amount is deducted from the purchase price on the closing date.