Grantor Vs. Grantee: What’s The Difference?

If you’re in the process of buying a house, there’s often more to purchasing the home than simply finding the “right one.” The current owner selling the house, called the grantor, will need to transfer ownership of the property to the new homeowner, or the grantee.

This transfer of ownership rights often requires a certain level of knowledge of the legal language used in real estate transactions. It can sound intimidating, but learning the basics is important for future homeowners.

Let’s take a look at the differences between a grantor and a grantee and go over some of the documents you might come across when transferring ownership rights in a real estate transaction.

There are two sides to a transaction. In real estate, a grantee is the recipient of the property, and the grantor is a person who transfers ownership rights of a property to another person. However, the specifics of their transaction may vary depending on the situation. The official documents they use, such as a deed, detail each of their obligations.

What Is A Grantor?

The grantor is the party in a transaction who conveys ownership of an asset. During a real estate transaction, the grantor sells the property rights to the grantee.

What Is A Grantee?

A grantee is the person in a transaction who receives something – such as a home. In terms of a real estate transaction, the buyer is the grantee, as they receive ownership of the property after the closing process ends.

Grantors and grantees have unique relationships depending on the circumstances of their transaction. They use different types of property deeds and documents to outline their expectations and bind them. Here are a few you should know.

General Warranty Deed

A warranty deed is a type of legal document used in the transfer of real estate from the grantor (seller) to the grantee (buyer). It comes with certain guarantees that offer extra protection to the grantee, in particular.

When a seller signs a general warranty deed, they effectively swear that there are no undisclosed title issues with the property. This promise even covers the time before the grantor’s ownership.

If a problem with the house title does arise, the grantor must pay the associated legal costs.

Grant Deed

A grant deed, also called a limited warranty deed or special warranty deed in some states, facilitates the transfer of property from a grantor to a grantee. It provides some protection to both parties, but not as much as a general warranty deed.

In the case of the grant deed, there are two warranties.

• The grantor has the right to sell the property and did not sell the property to anyone prior.

• There are no title problems, like liens or claims, against the house from their time as the owner. However, it doesn’t protect the grantee from any claims made against the property before the grantor’s time.

So, in the end, a grant deed protects the seller from liability in the case of previous title problems and the buyer from current ones.

Special Warranty Deed

This type of deed offers an extra level of protection to the grantee, compared to some others. The grantor makes a guarantee to the buyer using a special warranty deed that the home was free and clear of legal encumbrances during their ownership. This means the grantor paid their mortgage off, has the right to transfer ownership and no creditors filed a lien against the home.

However, it only applies to the grantor’s ownership. The seller is not responsible for any claims made against the property before they owned it.

Quitclaim Deed

Like warranty deeds, quitclaim deeds transfer ownership from the grantor to the grantee. However, a quitclaim deed doesn’t guarantee the grantor’s interest in the property. So, there is no protection in place for the grantee if they learn the grantor did not hold the property title or if they sold the real estate with property title problems.

Usually, quitclaim deeds only pop up in certain situations. For example, you may use one to transfer property between family members. Or, you may use them to transfer a title into or out of a trust.

Due to the lack of protection, though, the grantor and grantee should both confirm that they’re comfortable with the parameters of a quitclaim deed before moving forward.

Deed In Lieu Of Foreclosure

A deed in lieu of foreclosure is a fallback method for homeowners to help them avoid foreclosure. In it, they voluntarily hand over ownership of their home to their mortgage lender.

In effect, a deed in lieu of foreclosure can help you avoid a foreclosure showing up on your credit report and release you from the responsibility of your mortgage. This type of deed can also potentially benefit both parties. With the transfer, both the lender and borrower avoid the costs and consequences of the lengthy foreclosure process.

Interspousal Transfer Deed

An interspousal transfer deed is commonly used to transfer ownership of a property during a divorce. The deed can be especially useful if both parties jointly own the house or the person remaining in the house is becoming the sole owner of the property.

Special Purpose Deed

A special purpose deed can be used when the grantor is not the person signing the deed. The grantor is instead represented by another person on their behalf, like a power of attorney or the executor of estate. With a special purpose deed, the grantor doesn’t incur any personal liabilities if there are claims against the property.

Let’s go over a few frequently asked questions about grantors and grantees.

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

Relative to other types of deeds, a general warranty deed provides the most protection to the grantee (the person who the house is being transferred to). The general warranty deed guarantees that there aren’t any title issues or claims against the property. If these issues do come about, the grantor pays any associated fees.

Who pays title insurance – the grantor or the grantee?

If the buyer is financing the home purchase, the mortgage lender will often require the grantee (home buyer) to purchase title insurance. In some cases, the grantor (home seller) may purchase title insurance on the grantee’s behalf.

For instance, certain title insurance policies may protect the grantor from any outstanding claims or liens found during a title search.

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

In a real estate transaction, the deed is typically prepared by a real estate attorney or title agency and is signed by the grantor and grantee on closing day.

The specifics of each real estate transaction can vary, and the range of real estate deeds you may need (or not need) shows that. But one thing is consistent: The grantor transfers ownership of the property to the grantee.

If you’re in the market to buy a house, you might want to familiarize yourself with the differences between a grantor and a grantee. And if you’re ready to move forward in the home buying process, start your mortgage application today with Rocket Mortgage^®.