In real estate the term is used to indicate that the investment analysis has ignored any debt on the property. (Debt can distort the analysis by increasing the return if the interest rate is lower than the rate of return on property and vice versa if the interest rate is higher.)
Free means a freehold estate, and in this expression it means a fee title. Clear means there are no money encumbrances against the property. Generally used to refer to a property free of mortgage debt.