Grantor vs. Grantee: What’s the Difference?

Understanding the Difference Between Grantor and Grantee

Buying a home is already an overwhelming process involving extensive paperwork and legal jargon. Many people get confused by the difference between grantors and grantees in the process, especially if it's their first time buying or selling a home. They may wonder what each party is responsible for, and how different types of deeds affect ownership. In this article, we'll break down these concepts, the duties of each party, types of deeds commonly used, and what each party may benefit from knowing as they navigate the process.

Grantors vs. Grantees: Key Differences

To help visualize the differences between grantors and grantees, see this overview of their roles and responsibilities.

Understanding these distinctions can help simplify the homebuying process for grantees or first-time homebuyers. Let's examine how these roles work in closer detail, especially across different types of agreements.

What Is a Grantor in Real Estate?

A grantor is a person or entity that transfers property rights to a new owner. Grantors can be individuals or businesses, and their responsibilities can vary by state. They usually include initiating and authorizing the transfer by choosing the right type of deed, preparing and executing the document, and signing over the rights to the new owner.

For instance, if you're selling your home, you, as the grantor, need to provide an accurate and honest deed. At a minimum, this document must include the full names of both parties (you and the buyer), your signature, an accurate property description, and the disclosure of any existing easements, covenants, or restrictions on the property. You also have to ensure the current title is free of encumbrances, such as liens, unpaid taxes, or debts, before completing the transaction. Additional minimum requirements will vary by state.

What Is a Grantee in Real Estate?

The grantee is the recipient of the grantor's property. They'll become the new legal owner listed on the deed. In most real estate transactions, a grantee is also referred to as a homebuyer, but grantees can be individuals, business entities, or trusts.

They must follow the terms of the agreement and register the deed with the county to make their ownership official. Once the transfer is complete, the grantee becomes the legal owner and, depending on the deed, assumes all or some of the responsibilities of ownership, including maintenance, and payment of any loans, insurance, or taxes due.

Grantee vs. Grantor Mortgage Responsibilities

In the case of a home being financed with a mortgage, the grantee or homebuyer is the party borrowing money to complete the purchase. The grantee then becomes the "mortgagor", and the institution providing the loan and enforcing its terms becomes the "mortgagee." The mortgagee can be a bank, credit union, or any lending institution.

Depending on the terms of the agreement, the mortgagor becomes responsible for meeting the contract terms, such as making payments and maintaining the property. This arrangement connects the ownership transfer to a lending relationship, where the property secures the loan while the buyer works toward full, unrestricted ownership.

Grantor and Grantee Roles in a Deed of Trust

The roles of the grantor and grantee can shift depending on whether you're dealing with a property transfer or a financing (mortgage) agreement. In deeds of trust and estate planning, party responsibilities look different from those in a traditional mortgage transaction.

Grantors are authorized to create and fund the trust by transferring assets into it, identifying a trustee to manage these assets, and deciding how they should be distributed. The grantee is the person or entity designated to receive those assets, according to the trust agreement.

However, different types of deeds warrant slightly different responsibilities for grantors and grantees.

• General warranty deeds: A general warranty deed offers the highest level of protection for buyers. Grantors are guaranteed full ownership of the property and have full legal right to transfer the property without any liens or claims. Grantors can also be held liable if any issues arise during the process, and the grantee gains ownership with confidence that their title is protected.
• Special warranty deeds: Special warranty deeds ensure that a property title is free of any encumbrances that may have arisen while the grantor owned it. It protects the grantee from claims connected to the grantor's period of ownership, for which the grantor is responsible. However, the grantors can't be held liable for any issues that take place before or after that period.
• Quitclaim deeds: Quitclaim deeds transfer ownership of a grantor's interest in a property without offering any warranty to the grantee, giving the lowest level of protection to grantees. Because grantors can only pass on a property's interest, quitclaim deeds are most common in non-sale transfers between family members or in situations like gifts, divorces, or moving property into a trust or LLC.
• Interspousal and special purpose deeds: Interspousal deeds transfer property ownership from both spouses to one spouse, or from one spouse to another, allowing the grantee to have full ownership and responsibility for the property. Conversely, special-purpose deeds, like special warranty deeds, offer limited guarantees that only cover the property during the grantor's period of ownership.

Different deeds offer varying levels of protection and involve a specific set of responsibilities for grantors and grantees. Be sure to explore your options fully and understand how each works.

Grantors and Grantees FAQs

Have more questions? Here are some FAQs about grantor versus grantee responsibilities.

Does the Grantor or Grantee Sign the Deed?

Grantors must sign the deed to authorize a legal ownership transfer. A grantee's signature may be required for some transactions, though it's not typically necessary. Since deeds are critical legal documents in the asset transferring process, grantor signatures usually need to be notarized.

Does a Grantor Have to Be an Individual?

Grantors don't have to be individuals. They can also be couples, business entities and corporations, and even trusts and estates.

What Happens if a Grantee Isn't Listed on the Mortgage?

If someone's name were to be found on a deed but not a mortgage, this means they legally own the property, but aren't necessarily required to make the mortgage payments. Since mortgages and deeds are separate legal documents, this can affect refinancing, selling, or protecting ownership rights, and it may create risks if the mortgage goes into mortgage default or foreclosure.

Does the Grantor or Grantee Pay for Title Insurance?

Responsibility for paying title insurance depends on the local norm in the county or region where the transaction is taking place. These customs can vary by state and county, but they can also be negotiated between parties. In many cases, grantees pay for the lender's title insurance while the grantor covers the owner's policy. In some regions, however, buyers and sellers may choose to split the title in a way that can benefit both parties.

Final Thoughts: Grantors vs. Grantees

To effectively navigate the homebuying process, homebuyers and sellers should know the roles of everyone involved. Most often, grantors are responsible for presenting a clear title before the transfer of assets, while the recipient, the grantee, accepts the assets, records the deed, and upholds the conditions of the transaction. These roles can shift in scenarios involving mortgages and trusts.

Different types of deeds, such as quitclaim, general warranty, special warranty, or interspousal deeds, offer different degrees of protection to the grantee and involve different responsibilities for each party. Once you understand each aspect of property transfers, you can take the next step toward homeownership and get prequalified for a mortgage today.