The truth is, it’s quite rare for title defects to come back and bite a person in the butt. Even though it’s a very real danger, it’s not a common occurrence.
Why is it so uncommon? Because most real estate transactions don’t happen without title insurance. If a Realtor or Mortgage Lender gets involved with a real estate transaction, chances are almost certain that they’ll require you to use title insurance. They aren’t willing to risk the liability (and you probably shouldn’t either). By default, this ensures that the vast majority of real estate deals across the country have a clear title — because the deals wouldn’t close without it!
It’s also worth noting that even when title defects are found, many of them are curable.
Got a subcontractor with a lien on your property? Pay them off! Got a mortgage company who forgot to discharge your mortgage? Call them and tell them to take care of it! Did you inherit a property but you’re missing the proper paperwork? Dig it up in your files and get it recorded!
Even though it’s not uncommon for a title search to uncover the occasional issue, it doesn’t mean these issues can’t be resolved, and it doesn’t mean you shouldn’t pay a professional to find these things (because let’s be honest — they’ll be much better at finding these problems than you will be on your own).
At the very least, you’ll be fully aware of what you’re walking into so you can protect yourself against potential problems.
It’s also worth noting that mistakes can be made, even by a title company. Another benefit of title insurance is that IF an issue ever arises in the future (and it was never disclosed to you through the title commitment), your title insurance policy will allow you to fall back on this policy as a safety cushion to protect you from any liability. If someone ever comes to you demanding compensation to fix a problem that the title company missed, your title company will be on the hook, not you.
If you don’t have a title insurance policy and a serious issue ever arises, you’ll be on your own. Even though this isn’t a common scenario, it is NOT a situation you want to find yourself in — ever.