Buying a home or piece of property is a really big deal. Once you’ve found the perfect place, you start envisioning yourself in it. You think about where to place furniture and hang pictures. You may envision hosting guests, celebrating important milestones, and making memories in this special place. Buying real estate is a truly exciting experience.

Going Beyond the Exciting Part

While finding and falling in love with a property is exciting, there are some less-than-exciting parts of the process, too. This includes familiarizing yourself with some of the documents and terminology that you may come across on your real estate journey. Though understanding terms like “grantor” and “grantee” isn’t the fun part – and not always necessary when you’re working with a trusted real estate professional – knowing the details is helpful in fully understanding your real estate transaction.

In broad terms, a grantor is the individual who transfers ownership to another person or entity, and the grantee is an individual who receives the transfer of the property. To simplify it, in a real estate transaction, the grantor is the seller and the grantee is the buyer. While much of this is straightforward, the obligation for each party depends on the specific transaction. The grantor may be the seller of a home, the landlord of a rental property (lessor), or a borrower who gives the mortgage (mortgagor). The grantee is the buyer, the lessee in a rental transaction, or the lender/mortgagee.

Grantors, Grantees, and Real Estate Documentation

In the sale of real estate, legal documentation determines the terms and conditions of the property transfer between a grantor and a grantee. It’s important to note that terminology and documentation can vary from state to state, and the circumstances of each transaction affect the type of legal document(s) needed to close the transaction.

There are a few types of documents that may be involved in the transfer of ownership between a grantor and grantee, each with its own purpose and level of protection. These are some of the more common types of deeds that can be used in a real estate transaction:

General Warranty Deeds

These are used in the transfer of real property from a seller to a buyer. It has particular guarantees about the title to the property which protect the grantee.

When the seller (grantor) signs off on a general warranty deed, they are legally asserting that the property is theirs to convey and that there are no undisclosed title issues with the property. Should a title claim be made after the fact, the seller will defend the buyer in court. (A potential title claim is also a reason why homebuyers should purchase title insurance, as it fully protects buyers in case something goes undiscovered – including issues that may not have originated on the seller’s side.) A general warranty deed is the type of deed used whenever property is bought and sold.

Special Warranty Deed

For the grantee, a special warranty deed provides some protection, though it is not as beneficial or protective as a warranty deed. With a special warranty deed, the grantor warrants that they have the right to transfer ownership and there are no liens or encumbrances against the property caused by grantor.

This type of deed does not, however, protect the grantee from defects in grantor’s title created before grantor’s ownership of the property. It only warrants that grantor has not caused any title defects during the grantor’s ownership. Special warranty deeds are most often used by lenders when selling foreclosed property, by homeowners when transferring property into their trust for estate planning purposes, or perhaps between family members or affiliated businesses.

Quitclaim Deed

A quitclaim deed offers the least protection to the grantee of all, but facilitates a swift transfer of property or of an interest in property. With a quitclaim deed, the grantor is not ensuring that they have a legal right to transfer the property to the grantee. It is solely a transfer of whatever ownership rights the grantor has, if any, to the grantee with no guarantee regarding the property rights. Typically, little or no money changes hands when a quitclaim deed is used.

Quitclaim deeds are most often used between family members or when there are changes in personal circumstances such as marriage, divorce and estate planning. Examples include the transfer property from parents to a child or between former spouses pursuant to a property settlement agreement. Quitclaim deeds may also be used by a title company to correct title issues.

The Value of a Real Estate Professional

Again, it all boils down to the state in which the transaction is being completed and the type of transaction being completed. A title search will determine all of the details surrounding the property’s history, and a title company or real estate lawyer will provide the best guidance for your specific circumstances. When it comes to a real estate investment, there is significant value in working with highly trusted real estate professionals who understand the fine print of title and conveyance. It’s equally important to purchase title insurance, which provides a high level of protection against the unknown.

If you are a buyer or seller and want the peace of mind that comes from knowing your real estate purchase is protected, or if you need a deed or other document prepared to correct a title issue, Attorney’s Title Group can help. Give us a call at 501.734.2233 or contact us online.