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Grantor is a financial term you need to understand. Here’s what it means.

What is a grantor?

A grantor refers to a person or institution that conveys ownership of a property. It is also an entity that creates a trust, also known as a settlor or creator.

Deeper definition

The word “grantor” is a legal term commonly used to describe a person or entity that creates a trust and transfers ownership of assets to the trust through a “deed.”

The grantor is always the person or entity that gives away certain property or rights to another person or entity, known as a “grantee.” A grantee also may be called a “beneficiary,” a term commonly used in trusts, wills and life insurance policies.

In a grantor trust, the grantor makes a trust and conveys assets to it. This kind of trust is usually revocable. The grantor can modify the terms of the trust or even revoke it altogether, as long as he is alive. However, upon his death, the trust becomes irrevocable, which means it must be administered based on the terms that the grantor stipulated when he was living. Nobody can make modifications to it once the grantor has died.

The person who creates a grantor trust can maintain control over the assets in the trust. He can make decisions about the assets just as he did before the creation of the trust and appoint himself as its trustee.

The job of the trustee is to properly manage the assets in the trust and make sure they are managed in the best interest of the beneficiary on behalf of the grantor. If the grantor doesn’t want to serve as the trustee, he can appoint another person or entity do so in his place.

Grantor example

The type of deed a grantor conveys varies from one state to another. Sellers and buyers should talk to their lawyers to learn which type of deed should be conveyed or received. It’s a legal matter, which is why a lot of title companies are hesitant to provide such advice to homebuyers and sellers.

  • Grantors in general warranty deeds: General warranty deeds protect grantees against claims that date back to the origin of the property. General warranty deeds offer buyers the maximum protection in a real estate sale. The role of the grantor on this type of deed is to verify that a title is “good and marketable.” This means no liens exist on the title that may prevent the grantor from selling the property, and that he has the power to sell the property.
  • Grantors in special warranty deeds: A special warranty deed is a real estate deed by which the seller only guarantees the title against defects that may have happened during the period of its tenure or ownership of the property. The grantor does not provide a guarantee against any defects in clear title that happened prior to its ownership.
  • Grantors in grant deeds: A grantor of a grant deed transfers a property with a guarantee that he or she has not sold the property to another person concurrently. He also makes sure that there are no additional encumbrances or liens on the property other than those he or she has disclosed.
  • Grantors in quitclaim deeds: A grantor of a quitclaim deed does not provide a guarantee on the title or on his legal right to transfer a property. Quitclaim deeds provide grantees minimal protection under the law. This deed is commonly used in cases where a title defect occurs, such as adverse possession, uncertainty about heirs, divorce procedures or any interest from another person or entity in the property.


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