✏️ Editor’s Note: Realtor Associations, agents, and MLS’ have started implementing changes related to the NAR’s $418 million settlement. While home-sellers will likely save thousands in commission, compliance and litigation risks have significantly increased for sellers throughout the nation. Learn how NAR’s settlement affects home buyers.
When it comes to real estate, there are two important roles you need to know: the grantor and the grantee. These roles play a big part in buying, selling, or transferring property.
In this blog, we’ll explain what the grantor and grantee do in real estate transactions. By understanding their responsibilities and how they affect each other, you’ll gain valuable knowledge about owning and transferring property.
Whether you are a home buyer or seller, it is important to understand the legalities of a real estate transaction. Let’s dive into the details.
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Grantor vs. Grantee in Real Estate
- What is a Grantor and a Grantee: In real estate, the grantor is the person or company that sells or transfers a property, while the grantee is the person or company that buys or receives the property.
- Transaction Process: The grantor makes a legal document called a deed to transfer ownership, and the grantee gets the deed as proof of the transfer and their ownership.
- Grantor’s role: Ensure clear title for the property, free from any issues that could affect the grantee’s rights.
- Grantee’s role: Verify grantor’s ownership rights and ensure proper execution and recording of the deed.
What is a Grantor in Real Estate?
The grantor is the one who gives or conveys something to someone else. In real estate, a grantor refers to the individual or entity that currently holds ownership or interest in a property and intends to transfer it to another party.
The grantor can be the current property owner, whether an individual, corporation or other legal entity. The grantor is a key player in real estate transactions. They take the lead in transferring property ownership or interest to the grantee. Moreover, they make sure that the transfer is legal and valid.
What is a Grantee in Real Estate?
The term “grantee” refers to the individual or entity who receives or is granted ownership, rights, or interests in a property, asset, or legal agreement. In real estate, the grantee is the homebuyer or lien holder.
The grantee is often the intended future owner or recipient of the property or asset. Their role is to accept the transferred ownership or interests and fulfill any obligations or conditions outlined in the agreement.
What is the Difference Between Grantor and Grantee?
The main difference between a grantor and a grantee is their roles in a legal agreement or transaction.
| Grantor | Grantee |
|---|---|
| Initiates the transfer of property ownership or interest | Receives the property ownership or interest from the grantor |
| Takes the lead in the transaction | Accepts the transferred ownership or interest |
| Ensures the transfer complies with legal requirements | Becomes the new owner of the property |
| Typically the current owner of the property | Typically the intended future owner or recipient |
| Responsible for creating and executing necessary legal documents | Obliged to fulfill any conditions or obligations outlined in the agreement |
The Relationship Between a Grantor and Grantee
The relationship between a grantor and a grantee depends on the legal documents that bind them. In real estate, the grantor transfers ownership or interest in the property to the grantee.
The grantor starts the transfer process, while the grantee accepts and assumes ownership or interest in the property. Moreover, the grantee fulfills any conditions or obligations specified in the transfer agreement.
Let’s look at the types of real estate documents that bind a grantor and grantee.
General Warranty Deed
A General Warranty Deed is a legal document that transfers ownership of property from a grantor (seller) to a grantee (buyer). It guarantees that the property is free of any liens or encumbrances except those specifically stated in the deed.
The General Warranty Deed also assures that the grantor has clear title to the property and will defend against any claims made by third parties.
This Deed provides the grantee with the highest level of protection by insuring the title and quality of the property being conveyed.
Grant Deed
A grant deed facilitates property transfer between the grantor and the grantee. However, it offers limited protection to both parties. This deed has two warranties – the grantor’s right to sell and the clear title.
Here are some key points about a grant deed:
- Purpose: A grant deed serves as evidence that the grantor is transferring their interest in the property to the grantee.
- Property Description: The grant deed includes a detailed description of the property being transferred. Such as the legal description, boundaries, and any relevant identifying information.
- Grantor’s Assurance: The grantor actively guarantees that they possess legal ownership of the property. Also, have the authority to transfer it, and, most importantly, ensure that the property is free from any undisclosed encumbrances.
- Delivery and Acceptance: The grant deed requires the grantor to deliver the deed to the grantee. The grantee must accept the deed to complete the transfer of ownership.
- Legal Protection: Lastly, by accepting a grant deed, the grantee gains legal protection against any future claims or disputes to the property’s title.
Quitclaim Deed
A Quitclaim Deed is a legal document that transfers any interest in a property from one party (grantor) to another party (grantee). However, it doesn’t provide any warranties or guarantees about the property title.
The grantor simply gives up any claim or interest they may have in the property to the grantee.
People typically use a quitclaim deed to transfer ownership between family members or to remove a name from a property title. But remember, a Quitclaim Deed does not guarantee a clear title or protect the grantee from any claims by third parties.
Moreover, the laws and requirements for Quitclaim Deeds may vary depending on the jurisdiction.
Special Warranty Deed
A Special Warranty Deed is a legal document used to transfer property from a seller (grantor) to a buyer (grantee). But with a limited warranty against title defects.
It assures the grantee that the grantor has not created any title problems, except for those specifically mentioned in the deed.
Unlike a General Warranty Deed, a Special Warranty Deed only guarantees the property’s title for the time the grantor owned it. Moreover, it does not protect against any claims made by third parties before the grantor’s ownership.
Deed in Lieu of Foreclosure
A Deed In Lieu Of Foreclosure is a legal agreement between a borrower (mortgagor) and a lender (mortgagee). The borrower conveys the property to the lender in exchange for the release of the mortgage loan.
This option is usually considered when the borrower is unable to make mortgage payments and faces foreclosure.
By voluntarily transferring ownership of the property to the lender, the borrower avoids foreclosure proceedings and the associated legal costs. The lender benefits by obtaining the property without the expense of a foreclosure sale.
However, the lender may still report the deed in lieu of a negative event on the borrower’s credit report.
What is Grantor-Grantee Index?
The Grantor-Grantee Index actively records and maintains information about property transfers and transactions.
It helps:
- People track the history of property ownership
- Researchers, real estate professionals, and the general public to find information about parties involved in transactions
- As well as provides access to important property records and documents
Bottom Line
In real estate, the grantor always transfers ownership of the property to the grantee. The types of deeds used for the transfer may vary.
Whether you are selling a house or buying a property, it is essential to have a good understanding of the real estate process. Real estate is complex. Arm yourself with useful knowledge for a smooth transaction.
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Frequently Asked Questions
1. Does the grantee own the property?
Yes, the grantee is the party who receives ownership of the property from the grantor. After the transfer is completed and the deed is properly executed and recorded, the grantee becomes the legal owner of the property.
2. Is the grantee the buyer or seller?
The grantee is typically the buyer in a real estate transaction. They are the party who receives the ownership rights to the property from the grantor, who is usually the seller or transferor.
3. What is the difference between grantee and trustee?
In a property transaction, the grantee is the person who receives the property. In the case of a deed of trust, the grantee is not the lender. Instead, the grantee is the trustee who holds legal title to the property while the borrower repays the mortgage to the lender.
4. What is the difference between title and deed?
Title refers to the legal right to ownership and possession of a property, while a deed is the written document that transfers ownership from one party to another.
5. Can grantor and grantee be same person?
Yes, the grantor and grantee can be the same person in certain situations. For example, if an individual wants to transfer property to a trust they have established, they can act as both the grantor (the person transferring the property) and the grantee (the person receiving the property).
6. Who conveys title to the buyer at closing?
The seller conveys the title to the buyer at closing. Transfer of title is typically formalized through the execution and delivery of a deed, such as a warranty deed or a quitclaim deed.
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