Definition of Clear Title

A clear title is a legal term that is used to describe whether or not a property or piece of land is free of any liens or legal requirements—encumberances that may remain with the property, even if ownership of the property changes.

Why is this term important?

A clear title identifies undisputed legal ownership of a property, as it means the property is free and clear of any lien or levy from the lender, businesses or government authorities, such as the municipal tax department.

If a home buyer purchases a home that does not have a clear title, they may then be responsible for taking steps to clear the legal matter or paying off the debt.

Examples of term

After the purchase of a home, the title is checked and the new owner is added to the property deed. This deed is part of the property’s title, which records all legal changes and pronouncements regarding this property. If the title is clear, it means there are no outstanding legal or financial issues associated with the property. If, however, the title is not clear, the new owner may be responsible for rectifying this matter. For instance, if the former owner did not pay property taxes, the new owner will be responsible for paying this outstanding sum in order to clear the title on the property.