Grant Deeds Explained: How Do Grant Deeds Work?

A grant deed is a legal document that facilitates certain property transfers between the previous owner of the property (the grantor) and the new owner (the grantee). Also known as a limited warranty deed or special warranty deed, it is extended when ownership of real property changes hands in return for money or other considerations.

A grant deed affirms that the grantor has the legal right to sell the property and that the grantee will not encounter any encumbrances from the seller's time as an owner. Encumbrances include a sullied title (the formal rights to ownership), existing liens (debt) associated with the property, unpaid property taxes, unreported easements, or other factors that might damage the buyer's ownership rights.

A deed is a legal document that formalizes property transfers from one owner to another. Property deeds such as a grant deed list a legal description of the property—including its mailing address and tax parcel number—and the names of the seller and the buyer.

A homeowner looking to transfer ownership typically deals with one of six types of deeds depending on their relationship with the buyer or grantee.

1. 1. Quitclaim deed: A quitclaim deed transfers property from one owner to another but it does not warrant a clear title, and it does not prove that the grantor has the right to deed (transfer) the property. Quitclaim deeds are typically used to clear up title errors, transfer property between family members or to a living trust, or add or subtract people from an ownership group.
2. 2. General warranty deed: A general warranty deed accompanies a commercial sale of real property. It is effectively an affidavit confirming that a grantor has the legal right to deed the property to the grantee, and it provides assurance of the title for the entire history of a property. It guarantees that the buyer will encounter no claims, tax liens, or other encumbrances from any period in the property's ownership.
3. 3. Grant deed: A grant deed functions like a general warranty deed with one notable exception: It only guarantees a clear title and a lack of encumbrances for the time the seller owned the property. This type of deed provides less protection to a buyer than a general warranty deed, which promises a clear title for the property's entire ownership history. While a grant deed does not protect the buyer against claims from a previous period of ownership, it does protect the seller from being held liable for these claims.
4. 4. Bargain and sale deed: A bargain and sale deed affirms that a grantor has the right to deed the title on the property for sale. It does not, however, assure that the grantee will receive their property free from encumbrances. These deeds typically accompany home foreclosure sales. To minimize risks that come with a bargain and sale deed, some buyers perform a title search, purchase title insurance, and contract a real estate attorney before purchasing a foreclosed home.
5. 5. Deed of trust: A deed of trust is a legal document that accompanies some home loans. It serves as an agreement between three parties—a beneficiary (the lender), the grantor (the borrower), and a trustee (a neutral third party such as a title company). It places a lien on a piece of property that expires when the borrower has fully paid back the loan.
6. 6. Mortgage deed: A mortgage deed functions like a deed of trust with one key difference. This type of deed features only two parties—a lender and a borrower. The trustee, who holds the title in a deed of trust, does not factor into a mortgage deed. Title in the property is split evenly between the lender and the borrower until the mortgage is paid in full. At that point, the title goes exclusively to the homeowner, who no longer owes any debt.

A grant deed is a type of warranty deed that accompanies the sale of real property in exchange for money or other real consideration. These property deeds have several key attributes.

• Legal description of the property: A grant deed formally describes the property, including its street address and its description in county records. In some cases the deed may list the property tax assessor's parcel number (APN).
• Confirmed by a title company: A title company confirms that the title for a building or land parcel is clear of any third-party claims. Grant deeds guarantee that a title search was conducted and did not reveal any claims from third parties from the period in which the seller owned the property. Unlike general warranty deeds, they do not cover encumbrances from prior owners' tenures.
• Notarized and filed: Most state laws require that all warranty deeds be authenticated by a notary public and filed in the public records of a county recorder or county clerk. Depending upon your municipality, this may trigger a transfer tax.

Grant deed forms and templates can be found on the websites of some municipalities and legal services sites. Property owners should seek formal legal advice before deeding their ownership stakes to someone else.

All investments, including real estate investments, come with inherent risks which may involve the depreciation of assets, financial losses, or legal ramifications. The information presented in this article is for educational, informational, and referential purposes only. Consult a licensed real estate or financial professional before making any legal or financial commitments.

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