What Is A Grant Deed?

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“What Is A Grant Deed? Understanding how deeds work before engaging in a real estate transaction is essential. You should be aware of the benefits and limitations of the grant deed, especially if you are purchasing real estate during a tax or foreclosure sale.”

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What Is A Grant Deed?

You should know the various types of deeds if you transfer or acquire title to real estate, including grant deeds, which often appear during tax or foreclosure sales.

 

A Grant Deed: What Is It?

What Is A Grant Deed? The grant deed is a legal document that transfers all property ownership from one party to another (the grantee). It is commonly used to convey real property but can also be used to get other property types.

Grant deeds outline the terms of the transfer, including assurances and covenants made by the grantor, who is responsible for conveying ownership rights. They must be signed and notarized before they become legally binding.

In this deed, the grantor guarantees the property’s title is free and clear from encumbrances, liens, or other claims arising from his ownership. However, there is no warranty against claims or encumbrances made before this period.

By signing a grant deed, all parties ensure they have protection in the transaction. Signing a grant deed indicates that all critical information has been disclosed transparently, providing no surprises.

 

Grant Deed Contents and Uses

Deeds are legal documents that transfer title to or an interest in real estate from one party to another when executed and delivered. As well as quitclaim deeds, general warranty deeds, and grant deeds, other types of deeds offer different levels of protection (as well as risks).

This document guarantees two things: that the grantor received the property and that it had no encumbrances on it. In addition to not providing any warranty for claims filed before the grantor acquired the title, it does not give any information for paying legal costs if a title claim needs a defense.

A general warranty deed, on the other hand, provides buyers with less protection than a general warranty deed, in which the grantor guarantees a good, clear title. A grant deed, however, provides buyers with more protection than a quitclaim deed, which does not contain any implied or express covenants or warranties.

 

Uses

Grant deeds often transfer real estate through tax and foreclosure sales, as grant deeds protect quitclaim deeds and general warranty deeds. Grant deeds may vary depending on who shares the property when transferring real estate between spouses (typically during a divorce).

 

Content

The grantor and the grantee are responsible for completing and signing the deed, including their names, the date, and an overview of the property transfer. Overwhelmingly, deeds are stamped by a notary, and witness signatures are required.

The grant deed will also contain a statement detailing the warranties contained. The overall format and content of the grant deed depend on the state’s laws where the property lies.

 

Exactly What It Does and Does Not Do?

There is a level of protection for both parties involved in a grant deed.

Essentially, a grant deed declares that the grantor owns the asset free and clear, so the new owner can handle it however they desire. Once the property passes to the new owner, a grant deed safeguards the original owner’s rights.

Furthermore, it provides a warranty against title problems or encumbrances that emerged while the grantor owned the property. This warranty does not cover title issues that may have arisen before the grantor acquired the property.

 

In A Grant Deed, What Is Necessary?

An effective grant deed is generally a reliable legal document that transfers property title from one owner to another. An effective grant deed includes the following information:

 

The property’s legal description

A grant deed provides a legal description of a property, its street address, and how it appears in county records. This information is valuable in understanding the valuation and purpose of a property.

A grant deed’s inclusion of the parcel number also benefits tax assessment purposes. It provides essential information and is helpful. Investing or owning a property responsibly requires understanding its legal description.

 

Confirmation from the title company

Title companies play a significant part in the market for property. Their job is to confirm that a title for a specific building or piece of land is free of third-party claims.

During the period the grantor owned the property, the grant deed included language that reassured the grantee that the title company had conducted a thorough title search on the property.

Encumbrances from previous owners are not considered in grant deeds. In contrast, general warranty deeds can cover such instances. Before buying or selling a property, you must take several steps to avoid potential problems.

 

Filing and notarization

Grant deeds must contain important information such as names, addresses, contact details, and the signatures of both the grantor and grantee; depending on the state, notarization may also be necessary.

Notarization and filing with the county recorder or clerk are two steps in the warranty deed process. Taxes may be assessed depending on the municipality.

Property owners must know their state’s laws when dealing with ownership transfers. Please complete all required steps to avoid severe consequences. Property owners should know their local laws.

 

Various Types of Deeds

The following are additional types of deeds besides grant deeds:

 

Various Types of Deeds

 

Deeds of General Warranty

A deed of this type ensures no hidden title issues about the property in question, including any prior complications that occurred before the grantor acquired the property.

The seller will compensate the grantee if any issues arise, ensuring they have a clean title to the property. For example, the grantor is responsible for paying all legal costs of a title problem. This occurs at any future point after transferring ownership.

In general warranty deeds, the title is clean. No legal issues will arise regarding property ownership. However, if a dispute arises, it will take some time and money, which could be expensive.

 

Quitclaim Deeds

A quitclaim agreement transfers ownership from a grantor to a grantee in real estate. However, it does not guarantee a clear title or confirm the grantor’s right to grant the deed.

By transferring all interests in a property, the grantor simplifies the process, resulting in a quicker transaction, but without the same safety net as other types of deeds.

Generally, this type of deed offers no protection for the grantee against other claims or liens on the property. That’s why it works best for transfers between family members or close friends. People should understand quitclaim deeds when dealing with potentially complex titles and mortgages. They often come into play when gifting or consolidating property ownership.

 

Tax Deeds

A tax deed effectively transfers property ownership to the government if the owner doesn’t pay taxes. As the title implies, you can conduct a legal sale to recoup your debts. Typically, these sales take place through auctions or tax deed sales.

In these sales, the buyer becomes the owner of the property. They can invest in real estate at a discounted price compared to current market prices. This process benefits governments and buyers. Governments recover delinquent taxes, and buyers save on potential real estate purchases.

 

Grant Deeds vs. Trust Deeds

A grant deed transfers property ownership from one party to another for a specified price. It describes the property in detail, names both parties involved, and sets the purchase price.

In the grant deed, the grantor guarantees that they are currently the rightful owner. However, there is no guarantee against prior defects in the title. Deeds of trust, conversely, secure loans against real property. When payments don’t get made, the lender may foreclose without going to court.

Unlike a mortgage deed, a sale or auction does not require a court hearing, so foreclosure is faster and less expensive. The lender receives the proceeds directly from the sale.

Deeds of trust differ from grant deeds because of the presence of a loan and subsequent obligations. In contrast, grant deeds allow property ownership to pass without the transferee retaining future rights.

With a grant deed, on the other hand, the borrower and lender have a continuous relationship until repayment or transfer to another party. If repayment occurs, lenders can foreclose on the property to obtain repayment, a right only available to lenders with a deed of trust.

 

FAQS

 

Does a grant deed resemble a mortgage?

Mortgages and deeds are different. A grant deed (and other types of deed) aims to transfer ownership from a seller to a buyer. Conversely, mortgages are transfers or pledges of real estate to secure a debt payment.

 

Grant Deeds vs Quitclaim Deeds: What’s the Difference?

A grant or quitclaim deed facilitates the property transfer between sellers and buyers. Grant deeds provide more protection for buyers. When granted a grant deed, the grantor warrants that the property was free of encumbrances during its tenure.

If the grantor has no interest in the property at the time of the deed’s delivery, then the grantee will not acquire anything through the grantee’s ownership of the property. Quitclaim deeds, on the other hand, contain no covenants or warranties.

 

Is there a type of deed that is stronger than others?

Typically, a general warranty deed provides more excellent protection to a buyer than any other type. However, it imposes the most significant liability on the grantor. It generally binds the grantor to many covenants, including:

  • The covenant of seizure— the grantor certifies that they own the property and have the legal right to convey it.
  • The covenant against encumbrances warrants that no liens or encumbrances exist against the property.
  • The covenant of quiet enjoyment— the grantor assures the grantee’s title will be good against third parties.

 

The grant deed proves ownership, right?

Grant deeds are proof of ownership. Once the deed registers with the appropriate county or state office, the grantee will become the legal owner of the property.

 

A grant deed serves what purpose?

One of the primary purposes of a deed is to transfer title and ownership from one party to another. When the grantor owns the property, the grantor ensures that the title is free and clear of all encumbrances, liens, and claims by third parties.

 

Exactly what are the differences between a grant deed and a trust deed?

Grant deeds transfer real property ownership from one owner to another. A deed of trust secures a loan to prevent the borrower from defaulting. No financial funding is involved with a grant deed, whereas a trust deed usually consists of the lender and the borrower.

Until the conditions stated in the trust deed take effect, the trustee holds legal title. When the trustee meets those conditions, the borrower will receive legal title.

 

Bottom Line

Despite its purpose, grant deeds lack warranties. It’s best to consult a real estate attorney and title company when dealing with one of these deeds.

It is possible that the new owner must pay a tax lien or mechanic’s lien to ensure a clear title to the property. Having a real estate attorney review your title documents before closing on a purchase is the only way to protect you against clouded title issues like this. You should still double-check the deed description. An attorney or their paralegal might copy from a prior document containing errors.

Whitman advises purchasing an owner’s title insurance policy. This will protect you even further. This is not the lender’s policy you must buy; it covers you as the owner. Ensure the title company examines the title for any breaks, liens, unsatisfied encumbrances, and separate restrictions during the title search.

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