Grantor Vs. Grantee in Real Estate: Everything You Need to Know
Whenever assets are being transferred from one individual to another, the transaction typically involves a grantor and a grantee. The two terms are used in legal documents in different industries to name the recipient of the assets and the person transferring ownership rights of those assets to someone else. These transactions can cover everything from stocks to real estate.
In this post, we’ll walk you through the grantee vs. grantor comparison in real estate and the obligations of both sides. This will arm you with the knowledge you need to better navigate legal contracts.
What Is a Grantor?
After finding the right property and securing the financing, many first-time homebuyers are only thinking about moving in. But an important part of the process that’s often overlooked is the actual closing of the purchase. Here you may find yourself asking one simple question: what does grantor mean?
The grantor is the party in the transaction that is selling the asset. In the case of a property transaction, this refers to the current property owner, who is transferring the rights of the property to the grantee.
When the property is being sold, this party can also be referred to as the deed of trust grantor. But when it comes to mortgages, the grantor is the borrower.
What Is a Grantor on a Loan?
The grantor on a mortgage loan is the person who signs the mortgage documents. In this case, the grantor meaning refers to the mortgagor or the borrower.
Grantor is also synonyms with the term trustor. This is used to describe a person who wants to transfer their asset into a Trust, conferring benefits to the trustee. The “or” suffix means that this party is “giving,” while the “ee” suffix means that the other party is “receiving.”
What Is a Grantee?
Once you know who the grantor is, the grantee definition is straightforward. This is the person receiving the asset. In the case of a property transaction, the term refers to the party purchasing real estate.
So, who is the grantee on a deed? On this legal document, the grantee is the buyer/new owner/recipient whose name appears at the top.
In the case of a loan, the grantee can also be described as a lienholder. The mortgage lender is the grantee in this case – sometimes called the mortgagee.
Deeds That Require a Grantor and Grantee
Now that you’re familiar with the grantor and grantee meaning, let’s dive into the different types of property deeds that name these two parties.
A warranty deed gives the grantee a warranty from the seller that allows them to defend the property title forever. Such a document proves that the grantor has the right to sell the property and that there are no liens against the title that could prevent the transaction from proceeding legally. Thus, this deed type primarily protects the grantee.
Grant deeds are limited warranty deeds available in some states. They also legitimate the conveyance of property from the grantor to the grantee, offering some protection, but not as much as a warranty deed.
When using a grant deed, there are two warranties. The first guarantees that there are no issues with the title, such as claims or liens, during the owner’s time in residence. The second is that the grantor has the right to sell the property and hasn’t already sold it to somebody else.
The deed, however, does not protect the grantee from the possibility that another party made a claim against the home before the grantor’s current occupancy. Therefore, it is not as comprehensive as a warranty deed, which does offer this level of protection.
Grantor vs. Grantee Quit Claim Deed
A quit claim deed offers the least amount of legal protection with no assurances about the grantor’s legal right to transfer the asset. Buyers who do not know each other rarely use this type of deed. Quit claim deeds are mostly used when real estate is being transferred between family members.
That’s because the grantee has no protection if it emerges that the grantor did not legally own the property or there are title problems. So, if you’re planning on using this kind of deed, make sure you understand the risks.
But the possibilities surrounding quit claim deeds raise an interesting question, can the grantor and grantee be the same person? This is only possible in a quit claim deed where the sole owner of a property transfers half the interest to his new spouse, for example, and lists himself as both the grantor and grantee.
Special Warranty Deeds
Grantor vs. grantee mortgage arrangements can affect the conveyance of a property. It could affect the grantee if the grantor has:
- Unpaid mortgage bills
- No right to transfer ownership of the property
- Creditor filing lien against the home
Under these conditions, the purchase of the home could be invalid, or the grantee could be taking on additional liabilities following the purchase.
Special warranty deeds offer additional protection for grantees, especially during grantor vs. grantee lien disputes. It guarantees that the seller is not responsible for claims made against the property prior to ownership.
Deeds in Lieu of Foreclosure
The grantor vs. grantee real estate vocabulary also extends to instances when homeowners want to avoid foreclosure. A deed in lieu of foreclosure means that the homeowner temporarily hands over ownership of their property to the lender to avoid being foreclosed (and having to move out).
Deeds like this typically damage your credit score. However, they can be beneficial to both you (the grantor conferring deed rights) and the grantee (the lender who gave you the money to purchase the home).
They benefit you in the sense that they keep your foreclosure private – something you might not be proud to talk about in public. And they help the lender avoid the costs associated with foreclosure.
Interspousal Transfer Deed
Lastly, interspousal transfer deeds involve the transfer of property ownership between married couples. These deeds can be used in divorce cases, with one party receiving a sum of cash that’s equivalent to their share of the home’s equity value.
As you might guess, the grantor is the spouse giving up their ownership rights to the property, and the grantee is the spouse receiving ownership rights. Unless the grantor has spare cash, they typically refinance their home to pay for the equity withdrawn by the other partner.
Title searches involve the examination of public records and retrieving documents on the history of a piece of property. It’s intended to determine a property’s legal ownership and if there are any claims on the property in question.
These records are kept in books at government offices. Each property name is accompanied by the following information:
- A legal description of the property
- The property address
- Any improvements being conveyed
- Dates of transfer of ownership
When transferring titles, officials use the book page of the deed in title documents and then update the grantee book as necessary.
The grantee book is helpful for finding out whether there are any liens or claims against the property. It shows both the current grantor, dates of previous transfers, and information regarding whether they were concluded appropriately.
Many buyers ask lawyers to check the grantee book for any potential hazards before proceeding with the purchase of a property. They work backward through the grantee book, looking for any evidence of outstanding title claims.
The exact grantor vs. grantee definition depends on the context in which these terms are being used, as both are applicable in different industries. In real estate, at least, the difference between grantor and grantee is pretty straightforward:
- A grantor is a person who transfers ownership of property rights to another person.
- A grantee is a person who receives property ownership rights from another person.
Is the grantor the owner?
The grantor is the person who holds property rights over a piece of real estate they want to sell. Therefore, the grantor should also be the owner.
Is the grantor the seller?
In many cases, the grantor is the seller of the property. However, buyers need to be careful because legal records may reveal that the seller isn’t the actual grantor. Buyers can accidentally purchase property from a seller who is not a grantor and wind up forfeiting their property later following a successful title claim by the real owner.
What is reconveyance?
Reconveyance is a situation in which the legal title of a property is returned to the original owner.
Who is a mortgagor?
A mortgagor is a person borrowing funds to purchase a home. They sign contracts with lenders where they agree to make repayments at certain time intervals. The mortgagee is the lender – the entity providing money to the borrower to make the purchase.
Albert Einstein is said to have identified compound interest as mankind’s greatest invention. That story’s probably apocryphal, but it conveys a deep truth about the power of fiscal policy to change the world along with our daily lives. Civilization became possible only when Sumerians of the Bronze Age invented money. Today, economic issues influence every aspect of daily life. My job at Fortunly is an opportunity to analyze government policies and banking practices, sharing the results of my research in articles that can help you make better, smarter decisions for yourself and your family.
More from blog
Your email address will not be published.