Definition
A clear title (also called a marketable title) is a property title free from any legal disputes, liens, or ownership claims. A home with a clear title can be sold or transferred without any legal issues or challenges to ownership.
Explanation
Before selling a property, a title search is conducted to confirm that the seller has a clear and undisputed right to transfer ownership. A title with outstanding liens, unpaid taxes, judgments, or disputes may create problems for buyers and lenders, delaying or preventing the sale.
A title company or attorney typically handles the title search process to ensure the property has no legal encumbrances. If any issues (clouds on title) are found, they must be resolved before the transaction can proceed. Homebuyers often purchase title insurance to protect themselves against potential claims on the property after purchase.
Example
A homeowner wants to sell their house, and a title search reveals an old lien from a contractor who was never paid. Since the title is not clear, the homeowner must resolve the lien (by paying or disputing it) before they can transfer ownership to the buyer.
Once the lien is settled, the title is now “clear,” and the property can be sold without any legal risk to the buyer.