As the name implies, a grant deed is a document in which an owner of real property grants title to the property to another person. In legal terminology, the person granting the property is called the “grantor”, while the person receiving the property is called the “grantee”.
Grant deeds are a common form of deed used for selling property. The grantor, or grantors if there is more than one, is required to sign a grant deed, and the signatures must be notarized by a notary public or other official authorized by law to administer oaths.
The most important main promises contained in every grant deed are as follows:
- The grantor is the true owner of the property;
- The grantor has not previously transferred ownership to any person or entity other than the buyer;
- There are no defects in the title or encumbrances in the title that have not been disclosed to the grantee, such as a lien or an easement of some kind.
Grant deeds usually cover the transfer of property in whole, although they can sometimes be used to effect partial transfers of property interests other than a fee simple interest in the entire property owned by the grantor. For example, a grant deed can be used to transfer a portion of a parcel of property.
How are Grant Deeds Different From Other Types of Deeds?
Many kinds of deeds are used for transactions involving property interests. Grant deeds can be distinguished from each of these other types as follows:
- General Warranty Deeds: Some jurisdictions use the terms “grant deed” and “general warranty deed” as if they are the same. However, general warranty deeds are typically much broader than grant deeds. A general warranty deed transfers property from the current property owner, the grantor, to one or more new owners, the grantees. When the grantor signs the warranty deed, the grantor guarantees the grantee against all title issues, regardless of when they may have arisen.
- So the guarantee is not limited to the time when the grantor owned the property. The guarantee covers even title issues caused by someone who owned the property before the grantor. The warranty means that the grantor is legally responsible for any issues with the title.
- Special Warranty Deeds: Special warranty deeds only guarantee those particular property interests and warranties that are specifically listed in the document. They can be either more or less inclusive than a grant deed, depending on the parties’ needs, but are likely to be less inclusive than a grant deed.
- Quitclaim Deeds: Quitclaim deeds are typically used where a person is giving up their ownership of property rather than selling it to a buyer. After a quitclaim deed is properly executed, it transfers any interest the grantor has in the property to a grantee. The owner, or grantor, terminates, or “quits” any right and claim to the property, thereby allowing the right or claim to be transferred to the grantee. The grantor does not represent that they own any particular interest.
- In fact, they may not own any interest in the property at all. So, a quitclaim deed is quite different from a warranty deed, in which the grantor warrants that they possess a certain interest.
- A quitclaim deed makes no warranty as to the interest a grantor may have or even that the grantor has any interest at all. So the grantee has no no legal recourse to recover any losses sustained in the transaction from the grantor. Again, the grantor makes no warranty, or guarantee as to the nature of their interest or even that the grantor has any interest at all.
A person contemplating what kind of deed to use in a property transaction should consult the law in their state in order to determine how it characterizes deeds to property. This is important, because one type of deed may be preferable over another depending on the nature of the property and what the transaction is attempting to achieve. Of course, an experienced real estate lawyer would be a valuable source of advice about which deed to use in any given transaction..
What Is Contained in a Valid Grant Deed?
Requirements for a valid grant deed may be different in different states, but a valid grant deed usually must contain:
- The legal names of the grantor(s) and grantee(s);
- A statement describing the property; the property should be clearly identifiable from this description;
- A statement of the essential terms of the transfer;
- The signatures of the parties.
A grant deed is valid only after it has been delivered to and accepted by the grantee. Notarization is usually not a legal requirement for the validity of the deed, but it can be a good idea to have the deed documents officially notarized, in order to prevent any possibility of fraud.
What If There Is a Hidden Defect or a Hidden Encumbrance on the Title?
If there is a defect in the title or some sort of encumbrance on the property, whether the grantee is able to recover damages for any losses they incurred may depend on the type of deed the grantor used to transfer their title.
For example, if there was a lien for collection of a debt on the property that was not disclosed, it could affect the sales price. The buyer might be able to sue to recover the difference in the sales price, if a warranty deed was used in which the seller/grantor warranted that they had an interest that was free of liens or other encumbrances.
Alternatively, they might be able to file a breach of contract or other type of contract-related claim, since a seller generally has a duty to disclose such information to the grantee. For example, in Florida, when a building contractor sells new residential construction, certain warranties are implied in the contract unless the builder expressly disclaims them. But issues of this type would be related to any contracts involved in the transaction and not the deed per se.
Of course, if the transaction was accomplished through a quitclaim deed, the grantee does not have recourse against the grantor, because the grantor made no warranty, or guarantee, as to the nature of the title the grantor held.
Damages are usually limited to those defects that were not disclosed to the buyer. If the property had some sort of negative characteristic when sold, and the buyer knew about it, they are considered to have “assumed the risk”. Or, it is assumed that if money changed hands, the price reflected any unfavorable condition of which the parties were aware. In that case, a claim for damages might not be successful.
Do I Need a Lawyer for Assistance with a Grant Deed?
Whether you are the grantor creating the deed, or a grantee receiving the property, it is in your best interest to work with a real estate lawyer who is experienced with the types of deeds that can be used and which is preferable in a given situation. That way, you will be informed of your rights and duties in relation to the transfer.
Most importantly, your lawyer can be on hand to help you draft or review the deed documents. Hiring a real estate attorney even as negotiations begin is the best way to prevent disputes in the long run.