There are some additional costs in buying a home that you will pay once agreeing on a purchase price. These are called closing costs. Your agent will give you an estimate when writing up your offer. One larger fee will be title insurance. This is based on the purchase price of your home and is required when getting a mortgage. I had recently written up an offer and the buyer and asked me why he had to get title insurance. I explained to him that he needs this to protect himself.
For example, the company that prepares the closing will prepare the title after checking for property liens. They will check with the county courthouse and the local municipality and other sources to find out if there are any unpaid bills that are tied to the property – such as water bills, sewer bills, unpaid or personal judgments. If the company doing the title search would miss a lien, then your policy should cover anything that would come up down the road. Coverage would be based on the policy you purchase.
One of my buyers, recently did not think he needed or wanted to pay for it because he was going to pay cash for his property. Really if you are paying cash you still want it. You should check with your agent or lawyer.
Title Insurance: A policy insuring the owner or mortgagee against loss by reason of defects in the title to a parcel of real estate, other than encumbrances, defects, and matters specifically excluded by the policy.
Title Search: The examination of public records related to restate to determine the current state of ownership.
Definition source: Modern Real Estate Practice in Pennsylvania