What typically reconciles costs that straddle the closing date in a statement of adjustments?

Utility bills and property taxes are the typical costs that need to be reconciled in a statement of adjustments when a transaction falls around the closing date. This reconciliation is crucial because these expenses often cover periods that are not aligned with the specific date when ownership of the property is transferred.

For example, if a property is sold and the closing occurs midway through the month, the seller may have already paid the utility bills or property taxes for the entire month. Therefore, the statement of adjustments will calculate the proportionate share of these expenses that the buyer will owe to the seller up to the closing date. This ensures that each party pays for only the portion of the utilities and property taxes corresponding to their time of ownership.

Understanding the significance of this reconciliation helps clarify financial responsibilities between the buyer and seller, ensuring a smoother transaction process.