Grantor vs Grantee

A home purchase, new or old, can be a lifelong dream for those making the purchase. Real estate attorneys see the purchase of a house as a simple transfer of ownership, and this is reflected by the terminology they use when describing the parties involved.

Even the most simple topics can seem complicated due to the legal language used. Let’s break down the differences between grantor and grantee.

What is a Grantor and a Grantee?

Understanding the difference between grantors and grantees is important, especially if you are thinking of purchasing a home. A grantor is a person who transfers ownership to another person. The grantee receives the real estate and becomes the new owner of the property.

Now we’ll examine some examples and dig a bit deeper into both the grantors and grantees roles.

Grantor definition

A grantor is a person who transfers property rights from one grantee to another. The grantor in a real estate deal is the person who currently holds the property rights. The grant is the deed that transfers ownership.

Grantee definition

The grantee is the person receiving the transfer after the closing of a property sale. The grantee, in other words, is the buyer.

Example of Grantee vs. Grantor

Lessor/lessees are a form of grantor/grantee. In this situation, the lessor grants a temporary possession right of a property to the lessee in exchange for rent payments. The lessee agrees to pay the agreed-upon amount according to the lease terms.

Another example of grantor/grantee is a mortgagee/mortgagor . The lender accepts a security in the property and grants the grantor/grantee.

What is the relationship between a grantor and a grantee in real estate?

Most grantors and grantees are strangers who conduct a transaction at arm’s-length – the purchase and sale of a real estate. The document that binds the parties defines their relationship.

Transferring title or deed

State law is usually responsible for regulating property rights. Each state has its own unique terminology. In most states, the difference between a title and a deed is the abstract nature of the title, while the deed refers to a properly recorded and filed document. The general principles are generally the same across the U.S.

Title searches are conducted prior to closing in order to ensure that the buyer receives exactly what they want. Title companies trace deeds through recorded property ownership history to establish chains. The current owner should be able to determine if the property is free of liens and claims. Title insurance protects buyers of homes in the event that something is not discovered.

The majority of residential real estate transactions fall into one of four categories of deeds. Let’s have a quick look at them all.

General warranty deed

A general guarantee deed provides the highest level of protection to a grantee. The grantor provides a deed which guarantees that the title conveyed is free of liens and other encumbrances and that they will defend the buyer if such a claim is made.

Special warranty deed

A special guarantee deed provides a less advantageous transfer of ownership because it guarantees only the absence of encumbrances during the grantor’s ownership. This type of deed can be used by temporary owners such as lenders that acquire the property via foreclosure, and then sell it quickly.

Deed in lieu of foreclosure

A deed instead of foreclosure refers to a deed that is signed by the homeowner/grantor to avoid foreclosure by giving ownership of the home to the mortgage owner. This is a hybrid model, as both lenders and homeowners have an existing relationship with the Mortgage. However, the relationship is based on the property.

Special purpose deed

It is used by those who sign a document as an official. The individual signing the deed is not providing a personal guarantee, but rather performing their assigned duties. For example, an executor administering a will or a sheriff holding an auction. If the buyer/grantee faced a claim on title, the office could be sued, but the grantor would not be responsible for the defense of the grantee, or any damages awarded.

Grantor vs Grantee FAQs

Here are some frequently-asked questions regarding the roles of a grantee and a grantor:

What is the best deed for a grantee?

The best way to protect the grantee is with a general warranty deed. This is because the deed guarantees that there are no other claims to ownership.

Is the grantor the same as the owner?

Yes, technically, the grantor owns the property. He transfers ownership to his grantee when the house is sold.

What are the strongest and weakest deeds?

The strongest deed to have is a general warranty deed, as it provides the most protection. A quitclaim deed offers the least protection and is therefore the weakest of all deeds. Quitclaim deeds can be used to transfer ownership from spouses or other family members. A general warranty deed, on the other hand, is for transactions between strangers.

The bottom line

It’s important to know what you’re purchasing when buying one of the largest purchases you will make in your life, especially if you don’t have much information about the seller. You’ll feel more confident if you understand the new terminology and procedures that you will encounter during the home-buying process. If you are in need of expert title services, contact us today to see how we can help.