Grantor Vs. Grantee In Real Estate: Definitions & FAQs

Key Takeaways


Buying a home is one of life’s most significant milestones, and it’s a source of great joy for many people. But at the same time, the process involves a lot of paperwork.

If you’re a real estate lawyer, most of this paperwork is routine. That said, the legal language involved can be confusing for the average homeowner. But unfamiliar words and legal terms don’t have to be complicated. In fact, they can usually be explained in very simple terms.

With that in mind, let’s analyze the terms grantor vs. grantee, which you’ll encounter in almost any real estate transaction.

What Is A Grantor?

In real estate, the grantor is the current property owner. In the case of a sale, the grantor will be the seller. However, a grantor can also be a spouse or even a public official such as a County Sheriff.

What Is A Grantee?

In general law, the grantee is the person who receives an asset, including cash, scholarships, or real estate. When a real estate transaction occurs, the grantee receives the title from the grantor. Similarly, a scholarship recipient is considered the grantee of the scholarship.

When a deed or title is written, the names of the grantor and grantee will be clearly specified. This guarantees that the property is legally transferred from one party to the other. The same is true for grantors and grantees in other types of contracts.


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grantor

What Is A Grantor Vs. A Grantee In Real Estate?

The grantor and the grantee are typically individuals who are transacting an exchange. However, the grantor or grantee can also be a company or organization. For example, a city might seize a property for unpaid taxes, or a developer might sell hundreds of homes to individual customers.

In fact, a grantor/grantee relationship doesn’t have to be an outright sale. It can also be a conditional or temporary relationship. A good example of the former is a lessor/lessee relationship. In this arrangement, the lessor (landlord) grants temporary occupancy in exchange for monthly rent payments. The lessee (tenant) agrees to pay on time in exchange for their occupancy.

A good example of a conditional relationship is a mortgage. In this case, the lender (grantor) holds a lien on the title until the homeowner (grantee) has paid off their mortgage. The homeowner agrees to make payments in exchange for the removal of the lien when payment is complete.

Transferring A Deed Or Title

The exact legal language used to transfer property ownership varies from state to state. For example, most states refer to the official ownership paper as a deed, but some states call it a title instead. Regardless, they’re basically the same thing.

The buyer’s attorney or real estate agent will typically perform a title search as part of the closing process. This is a public record search to establish that the title is “clean.” This means that there’s a clear record of ownership, from the beginning of public records up to the current owner. Buyers should also purchase title insurance, in case the title search misses any adverse information.

What Types Of Deeds Name Grantors & Grantees?

There are several types of deeds that name grantors and grantees. These include:

  • General Warranty Deed

  • Grant Deed

  • Quitclaim Deed

  • Special Warranty Deed

  • Deed In Lieu Of Foreclosure

  • Special Purpose Deed

  • Interspousal Transfer Deed

These deeds transfer permanent legal ownership of a property, but not all of them work the same way. Let’s look a little closer at each!

General Warranty Deed

A general warranty deed offers the most protection for the grantee. In this kind of deed, the grantor doesn’t just promise that they hold a clean title; they also agree to pay legal fees if a third party claims the title.

Grant Deed

A grant deed is the most common type of real estate sale. With a grant deed, the grantor guarantees that they have disclosed any liens or restrictions that they are aware of. They also guarantee that they haven’t sold the property to any third party.

Quitclaim Deed

With a quitclaim deed, the grantor makes no guarantees of any kind. They simply sign over whatever ownership rights they possess – and there’s a chance they may not have any rights whatsoever. Since this type of deed offers almost no legal protection to the grantee, it’s almost never used between strangers. That said, it can sometimes be used in transactions between family members.

Special Warranty Deed

A special warranty deed isn’t actually special. It’s a transfer where the grantor guarantees that there have been no new liens or other encumbrances while they owned the property. This is most often done by lenders, who want to resell a property after a foreclosure quickly.

Deed In Lieu Of Foreclosure

In a deed in lieu of foreclosure, the grantor is the homeowner, and the grantee is the lender. In this scenario, the homeowner is behind on their payments, and the bank has threatened to foreclose. Instead, the homeowner agrees to transfer full ownership to the lender and forego the expense of foreclosure hearings.

Special Purpose Deed

A special purpose deed is a deed used by public officials, or others acting in an official function. These can include sheriffs holding property auctions, or individuals who are the executor of a will. In this case, the grantee cannot hold the official personally responsible if they later have to defend their title in court. They may, however, be able to sue a larger entity. For example, if you bought the house at a sheriff’s auction, you might be able to sue the county or the sheriff’s office.

Interspousal Transfer Deed

An interspousal transfer deed is a free, tax-free transfer of property from one spouse to another. The property is considered to be owned by the second spouse (the grantee). It is not community property. Generally, people use an interspousal transfer deed when one spouse has better credit. By transferring ownership to that spouse, they can refinance at a better rate.

grantor definition

Grantee Books & Title Searches

Grantee books are an old-school way of recording title transfers. These books are filled with lists of grantees, listed by last name. This makes it easy to document the chain of ownership. Depending on your jurisdiction, there may be paper records dating back well over a century. Newer records, however, are normally digitized, and many jurisdictions are in the process of digitizing their older records.

Regardless of whether the format is paper or digital, a title search works more or less the same way. You work backwards in the grantee book from each owner to the previous one. You then continue the process until you reach your jurisdiction’s earliest record. As long as there’s an unbroken chain of ownership, the title is considered clean.

Grantor & Grantee Title Insurance & Warranty Deeds

If you are the grantee of a deed, even a general warranty deed, you should purchase title insurance. In fact, your lender will require you to purchase it, so it’s not even optional unless you’re buying your house outright.

In many real estate transactions, the grantor will pay title insurance costs on behalf of the grantee. This is mutually beneficial, for two reasons. For one thing, insurance is typically cheap, so it’s not a major expense. For another thing, insurance will also protect the grantor from any liability in the event of a claim, as long as the grantor has conducted the sale in good faith.

Summary

Comparing and contrasting the terms grantor vs. grantee might seem complicated, but as you can see, it’s really not. In a real estate transaction, the grantor is the seller, landlord, lender, or a person signing over the title in an official capacity. The grantee is the new homeowner or tenant. That’s all there is to it!


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