Grantor vs. grantee: What's the difference?

When purchasing a home, you'll encounter mortgage terms that might feel unfamiliar at first, such as "grantor" and "grantee." Simply put, these words identify the two key players in any property transfer - the grantor is the seller (the person transferring ownership), and the grantee is the buyer (the person receiving ownership).

This information is public record. You can typically locate the grantor and grantee for any property through your county recorder's website. While closing documents can seem intimidating with all their legal language, understanding these fundamental roles will help you navigate the process with confidence and clarity.

The definition of grantor and grantee

In real estate, the grantor is the person who transfers property ownership, while the grantee is the one who receives it. The definitions of grantor and grantee are important because these roles appear in legal documents like deeds, which outline each party’s rights and responsibilities.

These terms also apply to other agreements, such as:

• Mortgage agreements: With a mortgage agreement or mortgage lender agreement, the lender (grantor) provides funds, and the borrower (grantee) receives them.
• Trusts: With trusts, the trust creator (grantor) moves assets to a beneficiary (grantee).
• Property deeds: In a house deed, the seller (grantor) transfers ownership to the buyer (grantee).”

Types of real estate deeds for grantors and grantees

When it comes to grantee vs. grantor, the relationship between a grantor and grantee depends on the type of real estate transaction. Different property deeds outline their responsibilities and agreements.

Here are some common types of deeds:

General warranty deed

A warranty deed is a legal document that transfers property from the grantor, or seller, to the grantee, or buyer. It protects the grantee by guaranteeing that the property's title is free from liens or other issues.

This guarantee even applies to problems that may have existed before the grantor owned the property. If any title issues arise with the house title, the grantor is responsible for covering legal costs.

Grant deed

A grant deed, also known as a limited warranty deed or special warranty deed in some states, transfers property from the grantor to the grantee. It helps protect both the buyer and seller from future title issues.

This deed guarantees that:

• The grantor has the legal right to sell the property and has not sold it to anyone else.
• There are no liens or claims against the property from the grantor’s time as the owner.

However, it does not cover any title issues from before the grantor owned the property. In short, a grant deed protects the seller from past title problems and the buyer from current ones.

Special warranty deed

Compared to a grant deed, this type of deed provides extra protection to the grantee. It guarantees that the property was free of legal encumbrances during the grantor’s ownership.

This means the grantor had the right to sell the property, paid off their mortgage, and had no liens placed by creditors. However, this protection only covers the time the grantor owned the property. The seller is not responsible for any claims from before their ownership.

Quitclaim deed

Like a warranty deed, a quitclaim deed transfers property ownership from the grantor to the grantee. However, a quitclaim deed doesn't guarantee that the grantor has a valid ownership interest in the property.  Protections for the grantee aren't in place if it turns out the grantor didn’t hold the title or if there were existing title issues at the time of transfer.

A quitclaim deed is typically used in specific situations, such as transferring a property between family members or moving a title into or out of a trust. Because quitclaim deeds don't offer guarantees, both the grantor and grantee should ensure they fully understand and accept the risks involved before proceeding.

Deed in lieu of foreclosure

A deed in lieu of foreclosure is an alternative for homeowners looking to prevent foreclosure. Instead of going through the foreclosure process, they willingly transfer ownership of their home to the mortgage lender.

This agreement allows the homeowner to walk away from their mortgage obligation while helping them avoid a foreclosure. It can benefit both parties, as the borrower and lender sidestep the expenses and complications that come with a traditional foreclosure.

Interspousal transfer deed

An interspousal transfer deed is often used to shift property ownership between spouses, particularly during a divorce. This type of deed is especially advantageous when both individuals share ownership of the home, or when one spouse is transferring their interest so the other becomes the sole owner. It helps simplify the division of property and ensures a clear title transition without the need for a traditional sale.

Special purpose deed (often special warranty deed)

A special purpose deed is a legal document that transfers real estate ownership from one party to another. However, unlike some other deed types, it comes with limited guarantees about the property's title.

The seller only guarantees that there are no title problems that occurred during their ownership period. The buyer is not protected against title defects that existed before the seller acquired the property. Special purpose deeds are commonly used in commercial real estate transactions, foreclosure sales, and estate sales.

FAQ

Here are some common questions about grantors and grantees.

What deed is best for the grantee in a real estate transaction?

A general warranty deed usually offers the most protection to the grantee compared to other deed types. It guarantees that the title is clean, free of any liens or claims. If issues pop up later, the grantor is responsible for paying any associated fees.

Who pays title insurance: the grantor or the grantee?

If the buyer or grantee is financing the purchase, the mortgage lender typically requires the grantee to buy title insurance. However, in some cases, the grantor may pay for title insurance on behalf of the grantee. For example, certain policies may protect the grantor from any claims or liens discovered during the title search.

When do I sign the property deed as a grantor or grantee?

Property deeds are typically signed by the grantor (seller/transferor) and, in some cases, the grantee (buyer/transferee) during the closing process. The grantor must sign to authorize the transfer, while the grantee may sign to acknowledge acceptance. All signatures generally need to be notarized for recording.

The bottom line: Grantors and grantees have different roles

When it comes to real estate transactions, the grantor is the individual who transfers the ownership of property, while the grantee is the recipient. By having a firm grasp of these key legal terms, you'll have a better understanding of your closing documents and different types of deeds. In turn, it can help with a smoother process during your homebuying process.

If you're ready to start the home loan application process, you can reach out to Rocket Mortgage today.