Which of the following items are paid in arrears?

Which of the following items are paid in arrears?

• A. Taxes and insurance
• B. Rents and interest
• C. Taxes and interest
• D. Rents and insurance

Answer: (C)

Payments in arrears are made after the time period has passed. Interest on a loan is charged for the period just completed and is paid at the end of that period, which is paying in arrears. Property taxes are assessed for the prior year and are typically paid after that year ends, so they’re also paid in arrears. Rents are usually paid before or at the start of the rental period (in advance), and insurance premiums are generally prepaid or handled through escrow, not paid after the coverage period ends. So, taxes and interest are the items paid in arrears.

Payments in arrears are made after the time period has passed. Interest on a loan is charged for the period just completed and is paid at the end of that period, which is paying in arrears. Property taxes are assessed for the prior year and are typically paid after that year ends, so they’re also paid in arrears. Rents are usually paid before or at the start of the rental period (in advance), and insurance premiums are generally prepaid or handled through escrow, not paid after the coverage period ends. So, taxes and interest are the items paid in arrears.