It’s a damn good question, I think. However, even assuming complete competence and dedication to duty on the part of the attorney and the original title search team / organization, it would seem to me that a problem with the title could surface at some point after their title search turned up no problems. I’ve also never heard of it happening, other than possible allusions to it at one time or another when I was a child and not paying attention to this stuff. But if the problem doesn’t show up until after the close, and if you can’t prove malfeasance, dereliction of duty or incompetence on the title searchers (and I would imagine that the time, trouble and expense to simply investigate that would be high), then it’s all on you, isn’t it? Sure, you could sue whoever had withheld material information, lied or destroyed evidence (all of that being difficult to prove: how do you prove “missing evidence”?), but that person may already be bankrupt.
I can even imagine instances where things like this might happen. Your title search is done prior to the closing, and between the completion of a successful and satisfactory title search and the close, what if the seller gets foreclosed upon? Or there was a lien placed against the property that hadn’t yet been recorded at the time of the search?
In a sort-of-related incident from my own childhood (I was ten at the time, so the details, which were never made explicit to me, are now even hazier), we were about to buy a new home. In fact, I’m sure that we had made an offer and it had been accepted. We were buying the home in a relatively new development, from the builder.
But it was winter time in New England, and we didn’t know at the time how close to bankruptcy the builder was. Since he had a buyer and figured he could “skate” until closing, he allowed the fuel oil to run out… in December. By the time my parents made their final walk-through (prior to close, I’m sure), my father discovered that the house – and all of the plumbing – was frozen. (I believe that we had even moved some furniture into the house, since Dad did all of our moving, and the house was only about 10–15 miles from our then-current house.) By that time, the thaw and disaster had begun, and I think my folks actually needed a lawyer to extricate themselves from the purchase commitment at that point.