In
property law
Property law is the area of law that governs the various forms of ownership in real property (land) and personal property. Property refers to legally protected claims to resources, such as land and personal property, including intellectual pro ...
, the term free and clear refers to ownership without legal
encumbrances
An encumbrance is a third party's right to, interest in, or legal liability on property that does not prohibit the property's owner from transferring title (but may diminish its value). Encumbrances can be classified in several ways. They may be f ...
, such as a
lien
A lien ( or ) is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the ''lienee'' and the pers ...
or
mortgage
A mortgage loan or simply mortgage (), in civil law jurisdicions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any pu ...
. So, for example: a person owns a house free and clear if he has paid off the mortgage and no
creditor
A creditor or lender is a party (e.g., person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property ...
has filed a lien against it.
Lately there has been a resurgence in interest for free and clear properties despite being an investment form that has been prevalent from early on. Investing in free and clear properties removes the need for a bank loan entirely.
Over 35% of all properties in the United States are owned free and clear with no outstanding mortgages or liens.
See also
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Land title
In property law, title is an intangible construct representing a bundle of rights in (to) a piece of property in which a party may own either a legal interest or equitable interest. The rights in the bundle may be separated and held by different ...
*
Legal doublet A legal doublet is a standardized phrase used frequently in English legal language consisting of two or more words that are irreversible binomials and frequently synonyms, usually connected by "and", such as "null and void". The order of the words c ...
References
Property law
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