Clear title

Clear title is a money term you need to understand. Here’s what it means.

What is clear title?

A clear title is one in which the owner owns the property outright and without any restrictions, such as liens or levies. With a clear title, there is no question as to who owns the property, and there is no chance that anyone can challenge the person’s ownership or make any kind of legal claim to the property.

Deeper definition

A clear title is also known as a “just title,” “good title” or a “free and clear title.” It is also a prerequisite to the property being sold. In fact, title companies are required to research properties and ensure there are no legal claims before issuing a title.

There are several things that can prevent a title from being a clear title. For example, if a property such as a home or estate has been passed down through the family for several generations, there may not be a clear record of who the original or legal owner is. Or, there could be several members who could claim property ownership.

There also may be one or more liens on the property. A lien is something a creditor can have placed on the property to collect money that the person owes them. If there’s a lien on the property, the person can’t sell the property without first paying the creditor or using some of the money from the sale to pay the creditor.

Problems with the property itself also can prevent a clear title. For example, if there are building code violations that have not been addressed or fixed, this can create a “dirty title” that would interfere with ownership or sale of the property.

Read more to learn how a title search may prevent mortgage surprises.

Clear title example

If you own a piece of property, such as a car or home, outright, and you don’t owe any creditors who can try to the claim the property, you likely have a clear title. There also needs to be a clear record and paper trail proving that you alone own it, and that no other family member, business associate or other interested party can make any kind of legal claim. If all of this is true, you are free to sell the property.

Read more to learn how long a lien holder is on a car title.


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