Legal Definitions - free and clear

Definition: Free and clear means that someone owns property without any debt attached to it. This applies to real estate, cars, appliances, and other items. When there is a mortgage, loan, or lien attached to the property, the person does not own it free and clear. However, once all debt is paid or released, the person will own the property free and clear.

• John bought a house for $200,000 and took out a mortgage for $150,000. He still owes $100,000 on the mortgage, so he does not own the house free and clear.
• Sarah inherited a car from her grandfather. There is no loan or lien attached to the car, so she owns it free and clear.
• Mark bought a refrigerator on credit and still owes $500 on it. He does not own the refrigerator free and clear.

The examples illustrate the definition of free and clear by showing situations where someone either does or does not own property without any debt attached to it. John's house and Mark's refrigerator are not owned free and clear because there is still debt attached to them. Sarah's car, on the other hand, is owned free and clear because there is no debt attached to it.