I recently had a transaction close where the title company “forgot” to record the transaction on a Friday afternoon. I won't name names, but it was not one of the companies I frequently use. It was a bit of a problem, because the Buyers were already on a plane to pick up their keys, take possession, and meet with construction people on Saturday to start remodeling.
The escrow agent, who is very pro-active and efficient, demanded that the title company issue a temporary letter of indemnity to cover the property until it was recorded. At first the title company balked, but then realized they had blundered in a big way and agreed. Fortunately, the Seller felt comfortable enough to allow the Buyer to take possession anyway.
I spoke with Title Representatives from a couple of other companies and they assured me this type of thing is rare, but it happens. But this experience has taught me that having a good title company that is careful and thorough matters and can be really critical to a smooth transaction.