In my last column, I pointed out that fraud and forgery are crimes that are being perpetrated more and more frequently against both owners of residential real estate and lenders. Unfortunately, many consumers are completely oblivious to the fact that a fraud artist can literally steal the ownership of their home without their knowledge. Moreover, many are surprised to learn that there are few safeguards within the current system of land registration to deter this type of fraud. If you are the unfortunate victim of such fraud, there is a good chance that you will suffer economic losses, not to mention the emotional trauma that will likely result.

These facts will no doubt leave consumers wondering aloud what they can do to protect their homes and themselves from fraud. As was discussed in last week’s column, your proof of ownership of your home (i.e., the deed) is a public record that can be viewed or even photocopied by anyone. After having obtained a copy of the deed to your home, there is very little to prevent a fraud artist from altering that document for an illegal purpose.

There is an inexpensive way to ensure that you are protected from this type of criminal activity. When you purchase a home, insist that your lawyer obtains a title insurance policy on your behalf. Title insurance cannot prevent a fraud artist from committing a crime. However, it does provide a no-fault mechanism to ensure that you are compensated for your losses. This is how it works:

If you become a victim of fraud relating to your “title” (the right of ownership in real property), you will inevitably need to hire a lawyer to untangle the mess caused by such fraud. This typically involves going to court and having title to your home transferred back into your rightful name or settling with a lender who may have been duped into making a loan against your property based on the work of a fraudster. In any event, you will be faced with substantial legal fees and possibly years of uncertainty while the ownership of your home remains in question. Because the courts can be notoriously slow in resolving contested matters, you will be unable to refinance or sell your home in the interim.

Title insurance provides a quick and inexpensive way to resolve this type of problem. Title insurance companies resolve matters covered by their policies by paying out the claim regardless of who was at fault, which means a quicker resolution for the victim of fraud. Once it is shown that fraud covered by the insured’s title insurance policy has taken place, the title insurer moves quickly to resolve the claim. It endeavors to ensure that policyholders do not incur out of pocket expenses to deal with title matters covered by their policy. Additionally, it enacts what is referred to as its “duty to defend” (i.e., the title insurer pays for all costs incurred in defense of title) so claimants do not incur hefty legal bills. It also covers the cost of requisite applications, materials, workmanship and other solutions to covered title problems.

The cost of two title insurance policies (one for the purchaser and one for the lender) is approximately $250 -- a one-time premium. Title insurance can eliminate many of the searches that a lawyer customarily carries out when acting on behalf of a consumer buying real estate, thereby saving the consumer the cost of these searches.

Considering the minimal cost of a title insurance policy and the unparalleled protection from fraud and forgery that it offers, consumers ought to consider the cost of title insurance money well spent. If you are buying a home or already own a home, ask your lawyer about title insurance. You can pay a little now or you can pay a lot later.