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What is a Clear Title?

Tricia Christensen
Updated: May 16, 2024

Many people look forward to the day when they no longer need to make house or car payments, and when they own their property free and clear. Such ownership, when no mortgages, loans or liens still remain on the property, is called a good title or a clear title. With a clear title, you own your property fully, and only you, or anyone else who jointly owns the property with you, has any claim to it.

It would be a mistake to assume that having a clear title doesn’t mean you won’t continue to make certain payments. For instance, with a clear title on a car, you may need to make yearly car registration payments, and you might also be required to carry a minimum amount of car insurance. Owning a home or other property free and clear doesn’t mean that a state or federal agency won’t come asking for property taxes each year. If you fail to pay those taxes, the agency requiring taxes can repossess your home.

Similarly you can own a clear title on property that sits on property you don’t own. You may own a mobile home but not the land it sits on. This means you must pay space rent each month in order to continue to reside where you do. Failure to pay space rent can mean eviction from the land your upon which your home sits.

Occasionally, people forget the income tax benefits of owing money on a home and not possessing a clear title. When you’re paying off a house in the US, you get to deduct any interest payments from your yearly income. Once you own the home free and clear, you may find yourself in a higher tax bracket. On the other hand, without a mortgage payment to make each month, you’ll be able to afford a slightly higher tax rate.

Sometimes it makes sense, especially with property titles, to mortgage the property to obtain a loan for part of its value. You will no longer own a good title, but if you use a new mortgage for improvements to your home, you may raise the value or the saleability of your home in a stable housing market. The value in a good or rising housing market may exceed the amount of your investment, suggesting the benefits in taking a new mortgage on a clear title.

Housing market does need to be mentioned. A clear title does mean you own your home solely, but value of the title is affected by current housing prices and fluctuates. Clear titles on automobiles, unless they are rare or classic, tend to mean that the value of the automobile stably declines. Most cars decrease in value based on age, mileage, and any wear and tear.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Tricia Christensen
By Tricia Christensen
With a Literature degree from Sonoma State University and years of experience as a SmartCapitalMind contributor, Tricia Christensen is based in Northern California and brings a wealth of knowledge and passion to her writing. Her wide-ranging interests include reading, writing, medicine, art, film, history, politics, ethics, and religion, all of which she incorporates into her informative articles. Tricia is currently working on her first novel.
Discussion Comments
By mdlee223 — On Jul 05, 2011

what if i own the property and the mortgage company paid my mobile home taxes and property taxes with out my consent?

can they possess my property?

By anon131531 — On Dec 02, 2010

I am one of several owners, of a multi unit home in NJ. The home has been passed down through generations and had a clear title. Accidentally, I have been recently informed that one of the owners has taken out a large HELOC against the property. Is this legal?

By anon120612 — On Oct 21, 2010

I am in the process of buying a home, and I'm a first time home buyer. Can anyone list the items that are needed for the first time home buyers to avoid any complication such as a lien or title issues etc.

It will be difficult if any one item pops up in future that could drag an investment of money, time and effort.

By anon83325 — On May 10, 2010

My mortgage company is going to lose $137,000.00 due to a $2,200.00 dollar lien against my house. what's wrong with that picture? it's in foreclosure now. I had a buyer, but I was unable to pay off the lien. the lien is against my ex-wife.

By anon68471 — On Mar 02, 2010

We bought our house and were given a clear title. We

went to sell and the buyers lawyer said that it had

liens on it by the government from a previous owner

and could not be sold.

The title company that we used is out of business. Can we ask the lawyer who signed off on it to have it released?

By sbc7zt — On Aug 13, 2009

Our house is being foreclosed on and now in the last week of redemption someone wants to buy it. However we have a tax lien on our home and this seller will not cover the amount owed to the IRS, but will cover the redemption amount. My question is: will they release a clear title to the buyers, and if not are there any solutions?

By anon38338 — On Jul 25, 2009

Question: on the day before we're to close on our first home, our attorney told us there's a lien on the house from two owners ago. Now he says they got a letter of indemnification from the old title company. We still don't feel comfortable buying this house but our attorney says we can get sued for breach of contract. We wanted a free and clear title, not a letter from some old title company. What are our rights?

By christinels — On Jun 16, 2009

Do we still have to pay?? We purchased a mobile home and had it financed.?

The finance company sent us a clean and clear title. The title does not have a loan on the home. It states that we are the owners, it is not a copy. Do we still have to continue to pay the loan?? I went online to verify that we have a clear title and it states that there is not a lean holder for out home.

By kikipnia — On Mar 25, 2009

We have lived in our single family 1300 sq. ft. home for 15 years. We have a clear title to the home; however, my hubby is dying to get into this real estate market to upgrade. We are outgrowing our home since we have two small boys who are likely to be over 6 ft. Can we just barter with the banks and use our home as a "down payment" to get into another home? We can't imagine going back to a mortgage over $400.00 a month!

By rosebud — On Aug 09, 2008

I am currently financing the house I am living in from my husband's name to mine. He passed away last year. We have 3 children (all minors) and we were never legally married. Also the state we live in does not recognize common-law marriages. Here's the kicker ... he took out a HELOC last spring with an insurance policy to pay it off if something happened. That policy has been denied, and I was stuck paying on it because the company threatened it would try to go after the house. Now it turns out they aren't even on the deed or title and only the initial mortgage company has a property lien. So is the HELOC considered unsecured? and it isn't on my credit report.. so what happens if I stop paying it? Can they get the house?

By housecrazy — On Mar 31, 2008

Just recently my husband and I bought a house. When we first did our loan closing my husband was between jobs. So, instead of the note being in both of our names they put the note only in my name. However the Mortgage Deed and the Warranty Deed both are listed as me and my husband. I wanted to see if later, when we refinance or sell the house would we have clear title to do so if the note is only in my name? If we do not have clear title, what would be the appropriate steps in order to achieve clear title? I have never bought a home before and this is all new to me. I feel like I am getting misled by the mortgage company.

By kcd1981 — On Mar 29, 2008

Several years ago, my parents borrowed money from my grandparents (who are now both deceased) to pay off the mortgage on their home it verbally agreed upon of course that this was a loan and they would pay them back over the course of time and both of their names were added to the deed. Now my mom is trying to get a first mortgage loan on the home and finance company is saying that we have no proof that we own the home free and clear how do we prove this

By justice2be — On Mar 16, 2008

I gave money to my boyfriend to purchase a vehicle. He purchased the vehicle. Without my knowledge he got the title put in two of his friends names and his name. He is in jail now. However, recently one of the his friend took the title out the vehicle and used the title to get a loan. He has not paid the loan the back and there is a warrant out for the friend. Can my boyfriend pursue legal charges against his friend if both him and the other friend did not have knowledge of him getting the car title loan.

Tricia Christensen
Tricia Christensen
With a Literature degree from Sonoma State University and years of experience as a SmartCapitalMind contributor, Tricia...
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