What is a grant deed?
A deed documents the ownership of a property, including restrictions or any rights third parties have, and identifies the seller and buyer when selling, buying or transferring a home. The seller is known as the grantor and the buyer is known as the grantee.
A grant deed, also known as a bargain and sale deed or a limited warranty deed, is one type of deed, most often used in a:
- Foreclosure sale
- Tax sale
- Court proceeding
- Cash purchase
- Divorce in which an interspousal transfer deed is used to transfer ownership from one spouse to another
Unlike other types of deeds, a grant deed does not safeguard the buyer from debts or liens. It indicates that the buyer or grantee holds title and retains possession of the property, but offers no express warranties against encumbrances. This is because the seller is not familiar with the property’s history prior to their ownership, so the seller is only conveying whatever interest they have, no more and no less.
“The grantor signing a grant deed guarantees that the grantor has done nothing that will prevent the grantee from having a good title,” explains Elizabeth Whitman, a real estate attorney in Potomac, Maryland.
However, it “isn’t a complete guarantee of title because it doesn’t guarantee that someone other than the person signing the deed hasn’t done something to affect title,” says Whitman, who adds that grant deeds are only used in some states. Other states use special warranty deeds, which are similar.
Components of a grant deed
A viable grant deed includes several provisions (depending on state or local laws):
- The names of the grantor and grantee
- A legal description of the property being transferred (address, lot/parcel number, boundaries, tract, etc.)
- Language indicating conveyance/granting of the property
- Two guarantees: The grantor hasn’t sold or conveyed the property to anyone else; and the property isn’t saddled by encumbrances (except any that the seller has disclosed to the buyer)
- Exceptions to the warranty of title (for example, a utility easement or public right-of-way)
- Signature of the grantor
The grant deed might also include addresses for the grantor and grantee and the date of the act, which “can involve the presence of a witness and notary public who seals or stamps the deed document,” adds Court Maynard, a Realtor with First Team Real Estate in Carlsbad, California.
Grant deed vs. warranty deed
Grant deeds are different from other types of deeds, including warranty deeds.
With a warranty deed — often used when you purchase a home from a builder or with the help of a real estate agent — the grantor guarantees that the grantor has a defensible ownership interest in the property that can be transferred to the grantee.
“A general warranty deed guarantees that the new owner will have good title free of any encumbrances, debts or liens, and that the seller or grantor also agrees to defend the title against any third-party claims,” says Whitman. “A grant deed, by contrast, doesn’t include any agreement to defend the title against claims.”
A special warranty deed is similar to a general warranty deed, except that the grantor only guarantees a title free of liens, debts or encumbrances during the time the grantor owned the property — the deed does not guarantee that title issues did not exist prior to the grantor taking ownership. A special warranty deed is often used for the transfer of a trust or estate.
Other types of deeds
Grant deeds also differ from quitclaim deeds, also called “as-is” deeds, in that quitclaim deeds aren’t all-encompassing. Quitclaim deeds are commonly used when property is transferred in a divorce or as a gift, or in estate situations when all heirs quitclaim their interest to the buyer.
“A quitclaim deed provides the least amount of protection, with the grantor not guaranteeing any title claims,” says Sarah Stitgen, an attorney with Atlanta-based Cook & James. “It simply states that the grantor transfers whatever interests they have to the grantee.”
There are also special purpose deeds that may be used in certain circumstances, such as during court proceedings. These deeds, however, don’t provide any strong protections to the buyer or grantee. These special purpose deeds include:
- Tax deed, used when ownership of a property transfers to the government due to unpaid taxes
- Deed in lieu of foreclosure, used when ownership of a property transfers to the bank or lender in order to avoid foreclosure
- Executor’s deed, used when the owner of a property passes away and the estate’s executor transfers property to a grantee named in the will
- Deed of gift, used when the property is gifted to the grantee from the grantor without any money involved
Although grant deeds have a purpose, there is no warranty attached to them, so tread carefully when involved in a real estate transaction that includes one. It’s best to enlist a real estate attorney and title company when dealing with this type of deed.
“For instance, there could be a tax lien or mechanic’s lien that you as the new owner will have to pay to ensure clear title to the real estate,” says Whitman. “The only way to be sure you are protected from clouded title issues like this is to have a real estate attorney review your title documents before you close on a purchase.”
Even still, check the description on the deed yourself. Sometimes, an attorney or their paralegal simply copies from the prior deed, which could contain errors.
To further help protect yourself, consider purchasing an owner’s title insurance policy, as well, recommends Whitman. This is different from the lender’s policy a mortgage lender requires you to buy, and covers you as the owner. In the title search, be sure the title company looks for any breaks in the chain of title, liens, unsatisfied encumbrances and separately recorded restrictions.