What does arrears mean in mortgage

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Because preferred shares have guaranteed dividends regardless of whether the company makes a profit or not, dividends are said to be in arrears if the company misses a cumulative dividend payment. The dividends in arrears must be disclosed in the footnotes to the financial statement.

The company is also restricted from making any dividend payouts to common shareholders until it settles its dividends payable account. Interest payments on bonds, meanwhile, are usually paid in arrears.

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What Are Arrears? Key Takeaways Arrears is a financial and legal term that most commonly describes an obligation or liability that has not received payment by its due date. Being in arrears may not have a negative connotation, as in cases when payment is expected after a service is provided or completed, not before. Annuities are called annuities in arrears or ordinary annuities when payments are due at the end of the period.

Arrearage applies to dividends that are due but have not been paid to preferred shareholders. Related Terms Annuity in Arrears Annuity in arrears refers to the payment of an equal amount of money that is made at the end of a regular term. A whole life annuity due requires annuity payments at the beginning of each monthly, quarterly, or annual period, as opposed to at the end of the period.

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