Clear title is a title free of claims or disputes about the ownership. Claims, doubts, or disputes about ownership often arise from liens or encumbrances.
Typically, title searches are conducted to see whether the property has clear title as a search of the local public land records should reveal any easements, mortgages, or other encumbrances. When a title has material defects, it is said to have a cloud on the title. Buyers are frequently skittish about purchasing property with clouded title because they risk having said property taken away. Therefore, establishing clear title is essential for any party who wishes to sell their property.
Many states such as California and North Carolina have enacted Marketable Title Acts, which statutorily removed title defects of ancient origin by limiting the enforcement of rights preceding the statutory time period or by a showing of a chain of title for a specific period of time.
In majority of states, a clearly established title by adverse possession is considered to have clear title. Additionally, a party wishing to remove a cloud on their title can do so by pursuing an action to quiet title.
[Last updated in July of 2022 by the Wex Definitions Team]