Back To: Real Estate, Personal, & Intellectual Property

What is a Clear Title?

A clear title refers to claims of ownership of an asset or property without any encumbrance or defect. When the ownership of a real estate or asset in uncontested and free from debts from creditors, lien or financial obligation, it has a clear title. A clear title is otherwise called a clean or just title, it is a title that is free of all kinds of lien, defect or encumbrance.

How Does a Clear Title Work?

A clear title can be described of ownership claims on a property or asset that is indisputable or unencumbered. When an individual has a clear title over a property, it means such property is without any lien or financial obligations, the owner holds full right to the ownership of the property. In every real estate transaction, a clear title is crucial, this status of a property is detected by title companies after a thorough investigation on the property. If there are claims on a property or any form of lien, such property is encumbered and has no clear title.

Why Clear Title Is Needed for Property Sales

Before the ownership of a property or asset is transferred from one party to another, it is important to do a search on the title. This search helps to identify the actual owner of the property and if the property is free from encumbrances. For instance, if there are financial claims or liens on the property, such property is not fit for sale. A clear title is the proof that the legal ownership of a property can be transferred. In cases where a property belongs to more than one heir of there are previous owners, the actual ownership must be ironed out and shown through the presentation of a clear title. Purchase of properties that have no clear title carry many risks. When there is a clear title on a property, it guarantees that the property has no claims, defects or liens. This title also helps to prevent fraud in real estate transactions. For instance, false deed might be recorded in a public record which can be used to defraud a buyer in the sale of property. However, even with a false deed, a seller that has no clear title on a property cannot sell the property, thereby reducing the rate of fraud in real estate transactions. Properties with liens have cloudy or dark title which makes the transfer of its ownership impossible.

Related Topics

• Property Law (Intro)
• Tangible and Intangible property?
• Knowledge Capital
  
• Calculated Intangible Value
• Real and Personal Property?
• Chattel
• Littoral Land
• Fixtures?
• Appurtenance
• Readily Removable Fixtures
• What is ownership?
• Role of Government in ownership of property?
• Allodial System
• Role of property rights in economic activity?
• What are the limitations on property ownership rights?
• What is nuisance?
• What is Zoning?
• What is Eminent Domain?
• Just Compensation
• What is Property Taxation?
• Assessment Ratio
• Millage Rate
• Homeowners Association (HOA)
• Accession?
• Rule of First Possession?
• Lost or Mislaid Items?
• Adverse Possession?
• Encroachment
• Contracts?
• Gift?
• Confusion?
• Establishing and transferring ownership in real property?
• Absolute Title
• Warranty Deed
• Register of Deeds
• Conveyance
• What is a fee simple interest in real property?
• Absolute Interest
• Restrictive Covenant
• What is a life estate in real property?
• What is a leasehold estate in real property?
• What are common types of co-ownership relationships in real property?
• Owning Real Estate Personally vs as LLC
• What if Co-Owners of Real Estate Want Out
• Community Property and Separate Marital Property?
• What is an easement interest in real property?
• What is a license of real or personal property?
• Bundle of Rights
• Absorption Rate
• Fair Housing Act
• Federal Housing Administration (FHA)
• Housing and Urban Development (HUD)
• National Housing Act
• Design Build Contract
• Building Permits
• Certificate of Acceptance
• Construction Surety Bond
• Acquisition, Development, and Construction Loan (ADC)
• Flipping (Real Property)
• Buy, Strip, and Flip
• Homeowner Affordability and Stability Plan
• Building Residual Method
• Accessory Dwelling Unit
• Property Management
• Cost-Plus Contract
• Real Estate Investment Fund
• Listing Agreement
• Property Lawyers
• Multiple Listing Service
• Home Equity
• Register of Deeds
• Title Search
• Opinion of Title
• Certificate of Title
• Abstract of Title
• Chain of Title
• Clear Title
• Cloud on Title
• Defective Title
• Defect of Record
• Action to Quiet Title
• Abeyance
• Encumbrance
• Affidavit of Title
• Warranty of Title
• Title Insurance
• American Land Title Association (ALTA)
• Earnest Money
• Private Mortgage Insurance
• Closing (Property)
• Settlement Statement
• Real Estate Settlement Procedure Act (RESPA)
• HUD-1 Form
• Closing Statement
• Closing Costs
• Buying Real Estate as an LLC
• What is a mortgage?
• What are the Rights of a Mortgage Holder?
• Deed of Trust or Security Deed?
• Trust Deed
• Certificate of Release
• Judicial Foreclosure
• Lis Pendens
• Deficiency Judgment
  
• Short Sale 
• Homeowners Protection Act
• Deed in Lieu of Foreclosure
• Tax Deed
• Tenancy at Will 
• Closed End Lease Definition
• One Percent Rule
  
• Net Lease
• Triple Net Lease (NNN)
• True Lease Definition
• Land Lease Option
• Hell or High Water Contract
• Habendum Clause
• Attornment
• Implied Warranty of Habitability
• Emblements Definition
• Co-Tenancy Clause
  
• What is a bailment?
• Consignment
• Unilateral-benefit and mutual benefit bailments?