Grantor vs. grantee: What's the difference?

Buying a home comes with a lot of legal jargon that can be confusing, even for well-prepared buyers. You’ll come across two important terms: grantee and grantor, which define who is giving and receiving the property.

Understanding these terms is key to understanding your closing documents. While the legal language may seem overwhelming, knowing the basics can help you navigate the process smoothly and avoid confusion.

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 definition of grantor and grantee is 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: The lender (grantor) provides funds, and the borrower (grantee) receives them.
• Trusts: The trust creator (grantor) transfers assets to a beneficiary (grantee).
• Property deeds: The seller (grantor) transfers ownership to the buyer (grantee).

Types of real sstate deeds for grantors and grantees

The relationship between grantors and grantees depends on the type of real estate transaction. Different property deeds outline their responsibilities and agreements. Here are some common ones.

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 warranty deeds, quitclaim deed transfer property ownership from the grantor to the grantee. However, a quitclaim deed does not guarantee that the grantor has a valid ownership interest in the property. There aren’t protections for the grantee if it turns out the grantor didn’t actually hold the title or if there were existing title issues at the time of transfer.

Quitclaim deeds are typically used in specific situations, such as transferring property between family members or moving a title into or out of a trust. Because they offer no 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 be mutually beneficial, as both 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

A special purpose deed is used when someone else signs the deed on behalf of the grantor. This could be a person with power of attorney or an estate executor. With this type of deed, the grantor is not personally responsible for any claims against the property.

Grantor vs. grantee in real estate: FAQs

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 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 arise later, the grantor is responsible for paying any associated fees.

Who pays title insurance – the grantor or the grantee?

If the buyer 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?

In a real estate transaction, the property deed is generally signed by both the grantor and the grantee on closing day. The grantor signs to transfer ownership of the property, while the grantee signs to acknowledge their acceptance of the property. This is usually done after all terms and conditions have been agreed upon and financial transactions are complete.

The bottom line: Grantors and grantees have different roles

Each real estate transaction has unique details, but the role of the grantor in transferring property ownership to the grantee remains the same. It's essential to understand the responsibilities of both parties, including the different types of deeds involved. To ensure everything is in order, consider working with an attorney or carefully reviewing your contracts.

Rocket Mortgage^® customers have the option of working with experienced real estate agents who will guide them and provide valuable education throughout the home buying process. And if you’re ready to move forward in the home buying process, start your mortgage application today with Rocket Mortgage^®.