Grantor Vs. Grantee: What They Mean In Real Estate

Buying a home, whether old or new, is often a dream come true for the one making the purchase. To real estate lawyers, however, the purchase of a home is merely a transfer of ownership rights, which is reflected in the language they use to describe the parties involved.

Legal language can make even the simplest topics seem more complicated than they are in reality, so let’s simplify some of that language with a breakdown of the differences between a grantor and grantee.

What Is A Grantor And Grantee?

It’s important to understand the difference between a grantor and grantee, especially when you’re thinking about buying a house. A grantor is the person transferring ownership to another individual. A grantee is the recipient of the real estate property.

Next, we’ll dive a little deeper into the role of both a grantor and a grantee as well as consider some examples of each.

Grantor Definition

In general, a grantor is someone who transfers a property right to a grantee. In a real estate transaction, the grantor is the current holder of the property rights, or – in other words – they’re the seller. The deed, which transfers ownership, is the grant.

Grantee Definition

The grantee is the person who receives the transfer of the property after, in the case of sale, a closing occurs. In other words, the grantee is the buyer.

Grantee Vs. Grantor Examples

A lessor/lessee is a type of grantor/grantee. In this case, the lessor is the grantor of a temporary right to possession of a property in return for rent payments, and the lessee accepts that right to possession and agrees to pay according to the terms of the lease.

A mortgagor/mortgagee is another example of a grantor/grantee. Here, the lender originates the mortgage while accepting a security interest in the property, and the borrower accepts its terms and agrees to repay.

The Relationship Between A Grantor And Grantee In Real Estate

For the most part, grantors and grantees are strangers to one another who are conducting an arm’s length transaction – the sale and purchase of a property. Their relationship is defined by the document that binds them.

The Transfer Of Deed Or Title

Property rights are usually governed by state law. Each state uses its own terminology and has particular quirks. In most states, the difference between a deed and title is that the title refers to an abstract concept while the deed is a filed and duly recorded document. But the general principles tend to hold throughout the U.S.

 

To ensure a buyer is getting exactly what they intend, title searches are performed prior to closing. The title company traces deeds back through the history of recorded property ownership to establish a chain of title. This should determine whether the current owner has ownership of the property free and clear of claims and encumbrances. Title insurance protects home buyers in case something goes undiscovered.

 

Most residential real estate transactions are one of four types of deeds, so let’s take a brief look at all of them.

 

General Warranty Deed

 

A general warranty deed is a legal document that’s the very highest level of protection for a grantee. The grantor offers a deed that warranties the title they’re conveying is theirs free and clear of any liens or other encumbrances, and that the seller will defend the buyer in court if any such claim is made.

 

Special Warranty Deed

 

A special warranty deed is a less beneficial transfer of ownership to a prospective buyer/grantee because it only guarantees the absence of any encumbrances on the property during the grantor’s ownership of the property. This type of deed is typically used by temporary owners, such as lenders who acquire the property through foreclosure and then try to sell it quickly.

 

Deed In Lieu Of Foreclosure

 

A deed in lieu of foreclosure is a deed signed by a homeowner/grantor who faces foreclosure and chooses to avoid the process by granting ownership of the property to the mortgage owner. It’s a bit of a hybrid model because lenders and homeowners already have a relationship with the mortgage – but it’s a business relationship centered around the property at stake.

 

Special-Purpose Deed

 

A special-purpose deed is used for those signing a deed in an official capacity. It means the individual isn’t offering a personal warranty but is simply carrying out their defined functions – such as an executor administering an estate or a sheriff conducting a property auction. Therefore, if the grantee/buyer faced a claim against title, they could sue the office but the grantor wouldn’t be liable for defending the grantee or any damages awarded.

Grantor Vs. Grantee FAQs

Now, here are some frequently asked questions about the role of a grantee versus a grantor:

Is there a best deed for a grantee?

A general warranty deed is typically the best deed for grantee protection. That’s because this type of deed promises that the property has no other claims of ownership.

Is a grantor the same as an owner?

Technically, yes, the grantor is the owner of the property and transfers ownership to the grantee during the sale of the home.

Is there a strongest and weakest deed?

A general warranty deed is the strongest deed because it offers the most protection. A quitclaim deed is usually the weakest deed because it offers the least amount of protection. Quitclaim deeds are often used to transfer ownership between spouses or family members, while a general warranty deed is used for arm’s-length transactions. 

The Bottom Line

Being sure of what you’re buying when making one of the biggest purchases you’re likely to make in your lifetime is very important, particularly when you don’t know much about the seller. Understanding the new language and procedures you’ll be encountering will help you feel more confident as you move through the home buying process.