In the Henry–Susan example, which closing costs are paid by Henry?

• A. Attorney's fees, recording fees, and title insurance
• B. Prepaid interest and taxes
• C. The seller pays all closing costs
• D. Mortgage payoff to Susan

Answer: (A)

The key idea is which costs the buyer is typically responsible for at closing when taking title. In this Henry–Susan scenario, Henry’s closing costs include items tied directly to the closing process and the transfer of title: attorney’s fees for handling or coordinating the closing, recording fees charged to record the deed and any mortgage documents, and title insurance to protect Henry’s interest in the property. These are standard buyer-related closing costs because they secure the transfer and protect the buyer after purchase.

The other options don’t fit as cleanly. Prepaid interest and taxes are usually associated with financing and proration between buyer and seller, not a pure, separate set of closing costs Henry would owe outright in this context. The seller paying all closing costs contradicts typical practice since buyers bear some closing costs as part of obtaining the loan and transferring title. A mortgage payoff to Susan would be paid to the lender to retire the seller’s loan and not to Susan directly, so it isn’t a cost Henry pays to Susan.