The Grant Deed Explained

A grant deed is one of the primary legal instruments through which you transfer the legal ownership of real estate from a grantor to a grantee.

Depending on your state, a grant deed can be the single most important document when it comes to the protection of your bought or sold property, but this is not always the case.

What a Grant Deed Promises

Whenever a grantor signs a grant deed, they are making two implied promises required by law:

The Right to Convey

The grantor promises that he or she hasn’t sold the property to someone else before you. This warranty serves as a guarantee that the seller is still the owner of the bundle of rights that they are handing over, and that you will be the sole recipient of that interest.

The Absence of Hidden Encumbrances

The other promise that the grantor makes is that the property has no outstanding or undisclosed mortgages, tax liens or mechanic’s liens attached to it.

For example, if you find out after a purchase that the seller has not paid the property taxes in full before a sale, the grant deed is what gives you the legal standing to hold them accountable.

As we noted before, the main thing that makes the grand deed unique is that these two protections are most commonly implied by law.

Whenever the document has the word grant in it, this automatically triggers the two warranties, as the terminology itself acts as a legal seal of quality for the period of the grantor’s ownership.

Grant Deed vs. Quitclaim Deed

A quitclaim deed is not something you would use in standard real estate sales, as it is most commonly applied in situations where you’re moving properties into a family trust or settling a divorce.

This is the as-is version of a property transfer, making no promises that the title is clear or even that the grantor owns the property in question.

Compared to a grant deed, it does not provide any baseline of protection to the buyer, which is why it is usually reserved for such low-stakes transfers.

Grant Deed vs. General Warranty Deed

General warranty deeds, on the other hand, are a more preferred choice for buyers of real estate, as these deeds do not limit the seller’s future liability as much as the grant deeds do.

This is due to the fact that general warranty deeds protect buyers against title defects from any previous owner of the property, while a grant deed only covers the time the last seller lived or owned that home.

The Anatomy of a Valid Deed

For a grant deed to be enforceable, it must contain several key elements, so make sure that each of the following is properly covered:

• Clear Identification: The full legal names of both the grantor and grantee.
• The Granting Clause: Specific language that signals the intent to transfer the interest.
• Legal Description: A precise technical description of the land (metes and bounds), not just the postal address.
• The Consideration: A statement of the value exchanged.
• Notarized Signature: The grantor must sign in front of a notary to prevent fraud and ensure the document can be officially recorded.

Why You Still Need Title Insurance

The last thing to keep in mind is that a grant deed does not actually clear the title that’s being sold. 

On the contrary, it only warrants against issues created by the current seller, so any potential issues like forgotten liens from before the previous owner, or even an heir from some previous owners claiming ownership of the property are solely the buyer’s problem in the future.

This is why you simply have to include title insurance along with the grant deed and make this a non-negotiable. 

Title insurance is the only thing that will protect you if the seller lied about their own ownership, and will provide you with financial payout and legal defense if a third-party claim emerges.

In Conclusion

The grant deed limits liability for sellers, while providing a legal guarantee of the seller’s right to sell to the buyer.

It is a powerful and efficient tool, but also one that comes with a middle-ground level of protection, so always make sure that your grant deed is backed by title insurance, and a professional title search in order to keep your investment secure.