Colorado Sales License Practice Test 2025 – Your All-in-One Guide to Passing the Exam!

Title insurance is typically included in closing costs when purchasing a property because it protects the buyer and lender against potential issues with the title, such as liens, encumbrances, or disputes regarding property ownership that may arise after the closing. The cost of title insurance is usually a one-time fee paid at the closing of the transaction and is an essential component of securing the buyer's investment in the property.

Property appraisal fees, while necessary for determining the property’s value, are generally a cost that is incurred prior to closing and is not always included in the closing itself. Homeowner's association dues are typically ongoing fees that are paid quarterly or monthly and are not part of closing costs, though they may be pro-rated at closing. Commissions for previous owners would not be part of the closing costs incurred by the buyer, as these fees are typically settled by the sellers. Thus, title insurance is the most relevant and necessary expense associated with closing on a property, making it the correct answer in this context.