the division of financial responsibility between the buyer and the seller for such items as loan interest, taxes, rents, fuel and utility bills. They are necessary to ensure that expenses are divided fairly between the seller and the buyer.

Example: the seller may owe current taxes that have not been billed; the buyer would want this item settled at closing. When taxes must be paid in advance, the seller is entitle to a rebate at the closing. If the buyer assumes the seller's existing mortgage or deed of trust, the seller usually owe the buyer an allowance for accrued interest through the date of closing.