Special language used by a profession or group is known as jargon, and real estate sure has plenty of jargon. Among the possibly unfamiliar terms you will encounter when you buy a home or other real property are grantee and grantor.
Each plays a role in the transfer of property, with one party granting the deed to the other party. But the terms apply to more than just property deeds. Renters, whether they know it or not, are grantees.
We'll explain the most common uses of these real estate terms so you can understand their practical application. Then you can casually drop this jargon at a cocktail party and impress your friends in the real estate business.Get Free Quotes
Grantee vs Grantor: The Definitions
In a real estate transaction, the people on either side are the grantee and the grantor. When it comes to buying a home, the buyer is the grantee because the buyer receives the deed granted by the grantor, the seller.
Buying a home isn't the only real estate transaction to involve grantees and grantors. Two other common applications of the terms are in land contracts and lease agreements. The grantee of a land contract acquires ownership of an equitable interest in a property from the grantor. In the rental market, landlords are grantors and tenants are grantees.
A grantee can be a person, multiple people, an entity, a trust, or a bank.
Grantees, Grantors, and Deeds
On either side of a real estate transaction are the grantee and the grantor, and the ball in play is either a deed or a lease agreement. Multiple deed types exist, each protecting the grantee (buyer) to a diminishing degree. The most protection for the buyer comes with a general warranty deed, the least with a quitclaim deed. Buyers of real estate should learn the key differences in the following deed types.
General warranty deeds.
The grantor of a warranty deed (sometimes called a general warranty deed to distinguish it from the special variety) promises there are no title defects. Mainly, he guarantees that he has title to the property, he has the legal right to sell the property, there are no encumbrances against the property, and nobody else has a lawful claim of title. For the grantee, this type of deed comes with maximum protection.
Special warranty deeds (aka grant deeds).
With a special warranty deed, also known as a grant deed, the grantor guarantees two things. First, that he hasn't sold the property to someone else; and second, that he personally didn’t create any title defects. Crucially, he does not guarantee anything about what prior owners might have done. His liability only extends back to the day he bought the property. A special warranty deed, therefore, can give a buyer a false sense of security. The seller could suspect complications with the title predating his ownership, but he doesn't take responsibility for them when he grants a special warranty deed, thus passing the headache to someone else.
Property deeds can often be found online via background report tools such as PeopleWhiz. No need to stand in line at the county courthouse.
Steer clear of quitclaim deeds unless you're receiving property from a family member or streamlining the conveyance (transfer) of property with a lawyer's guidance. With a quitclaim deed, the grantor doesn’t promise anything about ownership or title, and the buyer takes a gamble. The grantor conveys whatever interest he has in the property but makes zero promises about what that interest is. Mary could grant Joe her ownership interest in the Grand Canyon for $10 and all Joe would get with the quitclaim deed is a hole in his wallet the size of $10. Quitclaim deeds do have legitimate uses, which we discussed in a previous article.
These aren't the only kinds of deeds, but they're the most common. Some other deeds are highly specialized, like interspousal transfer deeds, usually used to convey ownership of non–community property from the spouse with a lower credit score to the spouse with a higher score, to improve the odds of getting a lower mortgage refinancing rate.
Grantee vs Grantor: Can They Ever Be the Same Person?
Yes, it's possible. A typical example happens after marriage. Let's say you own a home—your name's on the title. After the wedding, you'd like to add your spouse's name to the title. The instrument for this change of title would be a deed bearing your name as grantor and grantee, alongside your spouse's name as a second grantee.
Wrap-Up: Grantee vs Grantor
Whether someone is buying a home, buying an equity interest in land, renting an apartment, or participating in some other real estate transaction, a grantor and a grantee will be involved. The grantor grants a deed or contract to the grantee. In your lifetime, you'll probably play one role or the other, or both. In fact, you probably already have—you just might not have known the jargon.
Key Takeaways About Grantee vs Grantor
- When ownership in real estate changes hands, on either side of the transaction will be a grantee and a grantor.
- In home buying, the grantor is the seller and the buyer is the grantee.
- Tenants and landlords also have a grantee vs grantor relationship, because the terms apply to contracts as well as property deeds.