To understand the grantor vs. grantee concept, you’ll need to know their definition. Grantor and grantees are common terms in legal tendering when purchasing or receiving documents.
Grantors are the holders of the deeds and other items when tendering, while grantees are the recipients. Understanding grantors vs. grantees dynamics will help you have seamless real estate transactions.
Each party’s legal process and mandate are clear depending on the transaction you’re engaged in. When dealing with real estate properties, there are fees to be settled in the purchase and transfer of the legal ownership that may cost either or both parties. Delve further into the difference between these two terms, and if you need any more clarification, reach out to a local eXp real estate agent.
What Is a Grantor?
A grantor is a trust or property owner. It could be an individual or a company that works to create and fund the grantor trust.
It has different meanings and references when used in different industries. For example, the grantor is usually the property owner or seller in real estate. When it comes to trusts, they’re the owner and financier.
The grantors in real estate contracts hold the title deed and should initiate the transfer of ownership to the grantee once you complete the buying process.
Other simpler terms used to refer to grantors are settlers, first owners, landlords, or patrons. They provide property descriptions of what property rights they’re transferring to the seller.
Grantors ensure that the details on the deed are accurate, as stated in the real estate contracts. Before submitting the transfer of official ownership documents, check the names, property names, and typos.
They must also sign at the end of the original document to show agreement and gain complete control of the real estate assets.
Grantors and Trustors
A Trustor’s main responsibility is to create a trust fund. A trust holds assets or investments that help distribute property when the grantor isn’t available. Then, the grantor appoints a trustor or a real estate lawyer to finish the closing process.
This way, your assets don’t get caught up in lengthy probates or county courthouse cases that bring confusion and unfairness to your asset distribution. The trustor has the following duties in trust creation and management:
- Choose the type of trust fund to use
- Work with your legal team to put your assets in the trust. Depending on the type of trust chosen, you’ll have to transfer ownership of the assets for a new title or deed.
- Choose the trust manager or a successor trustee who’ll carry out your wishes to the latter.
- Naming your beneficiaries and their percentage contribution in the shares
- State and update your trust per how you’d like it administered if you pass away
A trust can contain any type of asset, including life insurance policies. But the assets, asset management, and administration must be clear and concise. The grantor should find this information in your trust documents for a swift takeover.
Also, you can get a living trust that allows you to manage or delegate your trust duties to another person while you’re still alive. It helps you deal with medical or aging issues without worrying about your trust’s administration.
What Is a Grantee?
A grantee is a general term referring to a recipient. The meaning differs in different niches. For example, in real estate, a grantee is a property buyer. The grantee receives the title written in their name showing a sale completion. The grantee should ensure that the name written on the title is within the legal framework to avoid confusion and lengthier transfer processes.
The grantee should also follow up with the clerk or company to ascertain the authenticity and correctness of the title deed. They should also purchase title insurance during the transfer process.
Grantees can receive different assets, scholarships, or certifications for completed tasks. The grantee manages a grantor’s trust when they die or choose to relinquish their ownership or rights to the fund. They ensure the grantor’s request will be followed and adhered to per the trust documents.
Grantor vs. Grantee Examples
There are many examples in the grantor vs. grantee legal battle. Any place or transaction you make where there’s a legal exchange of documents or items qualifies as a grantor-grantee relationship. It’s especially true in a place where you sign legal contracts to finalize a deal. Check out the following examples:
Trust
When a grantor writes a trust, they must entrust it to a trustee who ensures their asset distribution is as per their wishes. This is the trustor-trustee relationship, where the trust creates and funds the trust with assets. The trustor should appoint a successor trustee or a living trustee to manage the stored assets in the trust documents.
Lease
You become a lessor when you lease your house, property, or item. The recipient is the lessee who receives the item and signs to show both parties agree to the set contract. If you have additional terms or conditions (from both parties), you must raise them before signing the lease documents for a smooth working partnership.
A lessee gets a piece of property or a house for a certain price or amount. The lessor agrees to give their property with set conditions on payments. Also, the landlord-tenant relationship could be a lease example. The landlord becomes the grantor, while the tenant becomes the grantee.
Mortgage
Mortgage owners and mortgagees are part of the real estate contingent. Most property sellers partner with different financiers to get such options for their buyers. It improves their marketing and attracts mortgagees to deal with them.
The financier signs the mortgage agreement to complete their house or property payment. It makes them the grantee as they receive the property as collateral as the mortgagee pays the interest/loan to completion. The grantee can’t modify the property unless they acquire full ownership or property rights in the form of a title.
Debt
Lenders and borrowers also have a grantor-grantee relationship. The lenders become the grantors, while the borrowers are the grantees. The lender may impose interest or extra charges on the loan amount when the borrower pays back.
Real Estate
Property sellers and buyers are grantors and grantees, respectively. The sellers hold the title deed and property rights that they transfer to the buyers once the sale process is complete. Different costs throughout the transfer of title, like title insurance, could add to the overall cost of property purchase.
The Relationship Between A Grantor And Grantee In Real Estate
The binding contract in legal property transfers in real estate identifies the buyers and sellers as grantees and grantors, respectively. The sale agreement signed by both parties should dictate how each party works through their roles and responsibilities.
Grantors and grantees could be individuals, companies, or joint entities wishing to enter a property sale agreement.
The grantor holds the current title to the property and will initiate the transfer of the property rights to the grantee if they reach a sale agreement. Different grantors will have additional clauses that specify the payment terms and the transfer process.
The transfer could be complex if companies, agents, or groups engage in the property exchange. Donations could also change the structure and requirements of the grantor-grantee relationship. There’ll be a change in the contract agreement and the relationship between the parties.
Grantors will initiate the transfer and write the grantee’s name in the deed transfer. The grantor must sign and ensure that the property details are accurate and correct. The grantor should fill in the asset details to avoid ‘carrying’ the error forward to subsequent owners.
Grantees should check on the property documents and ascertain their correctness before submission. They should work hand-in-hand to present flawless documents, quicken the transfer process, and receive their property rights.
Types of Deeds
A deed is a legal document that binds parties who want to deal with their property or assets. Various deeds represent different property transactions. Consider these types of deeds.
General Warranty Deed
The general warranty deed is the most common in property transfers. It has six must-do covenants to make it a avoid transfer:
- The owner should have the title and possession of the property
- The grantor should be able to transfer the title and possession of the property
- The property should have no encumbrances
- The grantor should ensure the grantee enjoys their ‘new’ property
- The grantor should protect the grantee against any claims
- The grantor should take charge of any ‘title’ issues should they arise in future
Grant Deed
The grant deed works as a special or limited warranty deed. Its covenants are similar to the general warranty deed but are only restricted to the period where the seller owned the property. For example, if you have title issues or encumbrances dated outside the period or the seller’s ownership, the buyer must address these issues.
Quitclaim Deed
A quitclaim deed is a risky way of working your property transfer agreement. Most people who engage in quitclaim deeds are often family members who pass on their deeds to generations. The grantor ‘releases’ the title and all its claims – they can’t be held liable for any present or future claims made to the grantee on the property.
Once you quit the deed’s claims to a grantee, the grantee becomes the new owner even though you can’t physically convey or transfer the title to them and their heirs.
Special Warranty Deed
A special warranty deed allows a grantor to convey their property rights to the grantee with the six covenants in a general warranty deed. However, the seller won’t be held responsible for issues arising before their ownership period. For example, if there’re unpaid dues from the previous owner, the buyer must take care of this without involving the seller.
Deed In Lieu Of Foreclosure (DIL)
This deed allows you to close a deal with the lender to avoid foreclosure. You can transfer ownership to the lender if you can’t handle the mortgage or loan repayments. It allows you to save your credit report from foreclosure because the lender will have your deed. The lender will also be able to recoup some losses from the transferred deed.
Special Purpose Deed
The special purpose deed is similar to the special warranty deed, where the warranty only applies to the seller’s ownership period.
Interspousal Transfer Deed
The interspousal transfer deed is common in divorces or separations. When two people agree to change the ownership or shared property to individual property. If you shared your property ownership, you could get the interspousal transfer deed to claim sole ownership.
The Process of Transferring a Deed or Title
Once you discuss and agree on the sale contract, you should start with the title and change of ownership process. Decide which type of deed you’ll get for the transfer process. Ensure you consult a lawyer on the transfer process to avoid preventable mistakes or omissions. Get the relevant documents you’ll need for the transfer.
Alternatively, get a lawyer to handle the transfer process to prepare the deed. It gives you a more solid option for your property transfer process. Once complete, review, sign, and notarize your deed to finalize your property acquisition. Don’t be too quick to sign and submit without counter checking the property details and the names.
Key Takeaways
- The grantor-grantee relationship is key for a seamless transfer of ownership in real estate.
- The process of title searches and/or ownership transfer in gift/charity donations vs. sales through agents or individuals differs.
- When signing your transfer document, affirm the property details and name title before submitting.
- Be keen when choosing the type of deed you’d want to use and contact a local real estate agent for assistance.
Frequently Asked Questions
Here are some common FAQs on grantor vs. grantees relationships.
Is the grantor the same as the owner?
Usually, a grantor is the property seller or current owner.
Who is the grantee on the deed?
The name on the deed (to whom the deed addresses) is the grantee.
What does it mean to be a grantor?
A grantor gives out their assets or items to a recipient.
Can a grantor also be a beneficiary?
A grantor can only be a beneficiary to a trust where they choose to have a living trust.
Which deed is best for the grantee?
The general warranty deed covers all property ad title issues and protects the buyer from any additional costs that may arise.
What clause specifies the type of interest and rights given to the grantee?
A Habendum clause deals with the grantee’s rights and interests.
What are the different grantee types?
The grantee-grantor relationship depends on the type of deed chosen. The most common grant types are general warranty deeds, special warranty deeds, DIL, quitclaims, and interspousal transfer deeds.
What is the strongest deed?
The strongest deed is the General purpose deed because of its elaborateness and strict covenants.
What is the weakest deed?
The weakest deed is the quit claims deed, as there’s no rule governing the transfer. The grantee has to foot for any issues in possession or with the title.
