Understanding the terminology is one of the most daunting aspects of buying or selling a home. Numerous technical terms with highly specific meanings get thrown around during the transaction, often not encountered in everyday language or even in other financial dealings.

One crucial pair of terms you'll encounter frequently is grantor and grantee. These terms, drawn from legal jargon, feature in purchase agreements, often referring to the home and property owner (grantor) and the buyer (grantee).

While these terms may appear frequently, they remain crucial in contracts, discussions, and negotiations with real estate professionals. Understanding the meanings of these terms, particularly the one that applies to you, is essential.

 

In What Ways Are Grantors And Grantees Different?

It is essential to know that a transaction has two sides. A grantee receives the property, while a grantor transfers the ownership rights. Their obligations are detailed in their official documents, such as deeds. However, the specifics of their transaction may vary according to the situation.

 

What Is A Grantor?

A grantor is one side of the transaction, the person who conveys the sale of an asset to another. A grantor is a person who is selling a piece of real estate. It can be the owner of the property, the bank, the landlord, or anyone else who wishes to dispose of the property.

A grantor can also grant an interest in the property to another person. This interest can be in the form of an easement, lease, loan, or gift. The grantor is also bound by any restrictions or covenants associated with the property.

 

What Is A Grantee?

A grantee is the party that acquires the asset on the other side of the transaction. For example, in a real estate transaction, it is the person who buys or rents land. It may be a homebuyer, a tenant, or someone else who is buying or renting a piece of property.

The grantee may have to pay rent or money to the seller and any associated taxes. The grantee is responsible for any costs associated with the transaction.

 

Real Estate Documents Involving Grantors And Grantees

Different types of deeds and documents are used by grantors and grantees to outline their expectations and bind them.

 

Warranty deed

General

Deeds that stipulate a property transfer from the grantor, typically the seller, to the grantee, typically the buyer, are called general warranty deeds. By agreeing to the terms, the seller or grantor assures that there are no issues with the property title or the property itself.

It provides the most robust protection to the grantee, necessitating the grantor to cover any legal fees that may arise due to any issues related to the property title, even those that may arise from claims originating under prior ownership.

Special

As with a general warranty deed, the Special Warranty Deed (SWD) offers limited specific protections to the grantee, the buyer. The grantor must guarantee that the home does not have any encumbrances on it under a special warranty deed — that is, no creditors could file a lien that could delay the transfer.

It is the grantor's responsibility to ensure the property is transferred directly to them and that any mortgages have been (or will be) fully paid off. It does not address any encumbrances that may have existed before the seller took ownership of the property and only applies to the period during which they owned the property.

 

Grant deed

In addition to being referred to as a grant deed, a limited warranty deed can also be called a grant deed. A special warranty deed (sometimes called that too) requires the seller to guarantee a free and clear title to the property, but it does not protect the grantee against claims made on the property before the grantor's ownership.

 

Quitclaim deed

Similar to a grant deed, a quitclaim deed transfers ownership from the grantor to the grantee. However, it does not guarantee that the grantor holds the title or that it is clear since it does not ensure that the grantor has the title. A grantee isn't protected if it turns out that the grantor sold the property with a problem with the title.

If the property is transferred between parties without any existing relationship - a transaction that happens at arm's length - a quitclaim deed may not provide adequate protection.

 

Deed in lieu of foreclosure

Homeowners generally wish to avoid foreclosure, especially during challenging times. With a deed in place of foreclosure, one can avoid being evicted from one's home. Suppose the grantee fails to make payments on their mortgage. In that case, the mortgage lender is obligated to take possession of the property.

This releases the grantee from their mortgage debt. This does not prevent your home from being lost. Instead, it helps you avoid foreclosure, which can adversely affect your credit score and make it more difficult to buy another home in the future. The grantor also avoids a lengthy legal process as a result.

 

Special purpose deed

It is expected to use a special purpose deed when the person signing it is acting in an official capacity rather than as the grantor. It is possible that the person in charge of managing an estate could be an estate executor, a power of attorney, or another estate administrator. In this case, the grantor is not liable for any claims.

 

Interspousal deed

Property can be transferred to one party of marriage using an interspousal transfer deed. It is frequently used in divorce cases to transfer the deed to one person, particularly when the property was previously owned by both individuals or by the other individual. The grantee usually refinances or sells the property once it has been transferred as the sole owner.

 

A Final Note On Grantors And Grantees

It is the grantors and grantees on opposite ends of a transfer of title, with the grantors acting as the sellers and the grantees acting as the buyers and leasees. Both parties are usually protected by deeds, which include ownership, responsibility, claims, and liens against the property.

Grantees may want to get title insurance even with deeds that provide a fair amount of protection (like the general warranty) to protect themselves from their liabilities, especially during the home-buying process; many mortgage lenders require it.