Contracts specify the terms of the relationship between two or more parties, typically regarding a transaction. One example is the transaction of services for pay between an employee and an employer. In financial transactions, the contract codifies an agreement between the party conveying a product, service, or property and the party receiving it.
In real estate parlance, the party conveying property is called the grantor. The party receiving the property is the grantee. Either party can be an individual, a business entity, or a partnership. The contract between the grantor and grantee establishes the terms of transfer between the parties.
A real estate or property transaction contract that does not clearly identify the grantor and grantee may lead to severe ownership disputes and the terms of transfer immediately or in the future. Particularly in real estate transactions, which are long-term contracts, the grantor-grantee relationship is crucial. Unfortunately, the entities filling the roles are not always evident.
Recognizing the grantor and grantee within a contract can seem like a hunt for lost treasure.
Documents Outlining a Grantor and Grantee Relationship
Real estate contracts are not the only legal documents to signify grantors and grantees.
- Landlords and renters have a grantor-grantee relationship.
- When a motor vehicle is sold, the seller is a grantor and the buyer a grantee.
- Various business arrangements, subordinations, junior partnerships, and other relationships can codify grantor-grantee relationships.
- Financing arrangements and wills also involve grantors and grantees.
Real estate contracts, however, can last decades; much longer than most of the relationships listed above. Most real estate contracts are clearcut and straightforward. The grantor and grantee are easily identified. But the lack of unintentional or deliberate distortion doesn't necessarily make recognition of the entities fulfilling those roles an easy task.
The contract used to define these types of transactions is typically called a deed.
Types of Deeds
Deeds are broadly classified as official or private. Official deeds are those involving legal or court proceedings. Private deeds are most often a property transaction. Deeds are categorized according to the type of title warranty provided by the grantor.
- A general warranty deed has the highest level of protection for the grantee, which may be operating under the disadvantage of limited information. The grantor makes a series of legally binding promises (covenants) and warranties to the grantee and their heirs against prior claims from any other party.
- A special warranty deed is one in which the grantor warrants (promises) that they received the title and warrant only defects arising during the time of their holding, not before.
- A quitclaim deed is also known as a non-warranty deed. It provides the least amount of protection to a grantee and makes no warranty regarding the quality of the title.
- Special purpose deeds are often used in court proceedings and situations where the deed is from someone acting in an official capacity. These offer virtually no protection to the grantee and, as such, are the same as quitclaim deeds.
Covenants in a general warranty deed can include a covenant of seisin, a covenant against encumbrances, a covenant of quiet enjoyment, and a covenant of further assurance.
Special purpose deeds include administrator’s deeds, executor’s deeds, sheriff’s deeds, deeds in lieu of foreclosure, and gift deeds.
A grantor passes real property in or by deed. A grantee receives the property. Laws regarding the rights and obligations of grantors are typically governed by state law and can vary between states.
Locating the Grantor or Grantee in a Document
Most real estate documents clearly identify the grantor and grantee. For example, title deeds usually have the grantor’s name or an alias in the first line or paragraph of the document. However, some deeds bury the grantor identity within the property description and exchange considerations.
Helpfully, the grantee’s identity is preceded by the grantor’s in real estate contracts originating in the United States. Once you find the grantee, you know the second party will be the grantor. What is not so helpful is that chain of title searches are performed using grantee books, which, as the name implies, are arranged by the identity of the grantee.
Grantee books are located in the county courthouse or county recorder’s office, and some may be over 100 years old.
- Most are kept in alphabetical order with the entries listed by the grantee’s last name.
- The legal description, property address and improvements are listed directly after the grantee.
- The date of transfer is included in the record.
- The book and page of the deed used to transfer the title are noted.
To find past grantors, you must work backward using the grantee information to determine when the current owner acquired the title and from whom. Once you identify the grantor’s name from the deed conveying the property to the current owner (grantee), you can look for it in a grantee book to determine when the previous entity or individual acquired the title.
Fortunately, you would only need to resort to the grantee books if there has been no title transfer in recent years. Most property deeds and transfers are digitally recorded these days making the title search much easier than it was before.
A crucial element in creating a deed is that the grantor and grantee must be identifiable. Although a deed must be “in writing,” there is no legal requirement for the deed to take any specific form as long as all the essential elements are included. The grantor and grantee may not be in the opening lines or paragraphs.
Every deed must be signed by the grantor and grantee, though. If all else fails, the signatures at the end of the contract should identify each. Digital documents can be made searchable, simplifying the identification process as long as the parties involved are correctly labeled. Also, digital signatures are easier to read.
But if you must deal with documents that originated before computer technology was common, you will be spending a great deal of time at the county courthouse poring through grantee books. In that case, remember that the grantor’s name should come first within the contract, followed by the grantee.
Compare the identities from the property description with those of the signatures to help you verify grantor and grantee.