What Is a Grant Deed and How Does It Work?

A grant deed is an important document that transfers title rights in real estate transactions. In such complex and high-stakes situations, a minor oversight—like not using the right documentation—can leave you in a vulnerable and financially challenging situation.

Therefore, if you are transferring or acquiring title to real property, you need to understand the various types of deeds that may be used. A grant deed can help guarantee that the title is clear and the grantor has the right to transfer it, but there are some restrictions. 

Avoid legal drama and ownership battles by developing a deeper understanding of grant deeds and the power and protection they offer.  

What is a deed? 

A deed is a legal document transferring title to real property from one party to another. The party can be an individual, a business entity (such as a corporation or LLC), a trust, or an estate. The party transferring title is called the grantor or the transferor, while the new owner receiving the title is called the grantee or transferee.

A deed typically doesn’t offer a guarantee or promise of protection when it comes to transferring property ownership. So, the new property owner may have to resolve outstanding issues like liens, zoning issues, or property claims—some of which could involve additional costs or lengthy legal battles.

There are different types of deeds, the most common ones being general warranty deeds, grant deeds, and quitclaim deeds. Each comes with different powers and obligations and conveys different property interests for both the grantor and the grantee.

Grant deed vs. quitclaim deed

A grant deed is used to transfer ownership between a buyer and seller. Quitclaim deeds are mostly used in transfers between family members, into or out of the grantor's trust or business, or to correct an error in a warranty deed. An easy way to differentiate the two is to remember that quitclaim deeds are often used in non-sales scenarios like probate proceedings or inheritance, where no money is involved in the transaction. 

Also, with quitclaim deeds, there is no protection for the transferee that the property title is clear from restrictions. For example, if you receive property with a quitclaim deed, there could be a right of way for the county fire department over your land, which means you likely won't be able to build on that part of the property. The transferor in a quitclaim deed may neglect to disclose this information, and they are not responsible for any damages resulting from the lack of disclosure.

Grant deed vs. warranty deed

Much like grant deeds, warranty deeds are used primarily for real estate property sale transfers. Both types of deeds are typically used where the grantor and grantee are strangers, and money is changing hands. The difference lies in the level of protection offered. A general warranty deed gives the grantee the most possible protection for a buyer against any past and future title claims. The typical grant deed only makes two warranties: That the grantor has not transferred the property to anyone else and that there are no title problems that arose during the time the grantor has held title.

Here’s an example of how the two deeds would play out:

Say you purchase land with a grant deed from someone that quickly flipped the property in 2 years, and after you complete your purchase, someone claims to have a lien against the property from 10 years prior. You’d likely be on the hook to hire legal counsel and settle the issue. If you purchased land with a general warranty deed, the seller is most likely responsible for sorting the ownership claim.

What is a grant deed? 

A grant deed, also known as a limited warranty deed or special warranty deed, is a legal document that transfers real estate ownership from a seller to a buyer. This special deed only “grants” the following promises to the buyer: 

• The property has not been sold or transferred to anyone else.
• There were no title claims while the seller owned the property.
• There were no encumbrances, like mortgages or pending property taxes, during their ownership.

As grant deeds are part of public records, they can aid in resolving title disputes and establishing ownership rights. 

A grant deed, however, doesn’t guarantee that title defects did not exist before the seller took possession of the property. For example, if a grantor owned the property from 2015 and used a grant deed to transfer the property to you in 2023, they are just claiming that there were no legal ownership conflicts during their ownership period. The grantee has no legal recourse against the grantor if a third party claims an interest in the property.

For property sellers, grant deeds are often preferred for property transfers because they aren’t obligated to provide resolutions to any title defects or liens that crop up. 

Key points: Grant deeds

Here are the main characteristics of limited warranty deeds:

• Can be used by a person or legal entity to transfer property ownership
• Establish clear title rights
• Are part of public records
• Are commonly used to transfer property between spouses
• Are prevalent in foreclosures and tax sales
• Offer more protection than quitclaim deeds, but less than general warranty deeds
• Makes no promise to pay legal costs of defending any title claims
• Must follow the state’s requirements to be deemed valid

Contents of a grant deed

A valid deed is subject to many requirements, including the deed structure and warranties provided. 

Required elements

While the exact specifications and format of grant deeds are subject to state laws, most grant deeds must contain: 

• The date. This is the official date the deed was signed and notarized. 
• Complete names of the grantor and grantee. Include full legal name(s) of involved parties. If the grantor or grantee is a business entity, such as an LLC or corporation, use the registered business name and business registration number. 
• A description of the property being transferred. The deed must include the legal description of the property, including street address, boundaries, natural landmarks, and tax parcel number. Any property restrictions should also be clearly mentioned. 
• A granting clause. Must clearly state the grantor’s interest to sell or transfer property to the grantee. The "bargain, sell, or convey" clause is commonly used as one that warrants that the seller has the right to sell the property. The exact wording of the grant clause can be subjected to local statutes. 
• Consideration. Details about the value exchange between the grantee and grantor for the property. Consideration could be monetary payment or some other valuable exchange, like providing future services or releasing a claim against the grantor.
• Signature of the grantor. The grantor's signature must be legible and signed before a notary public or government official. 
• Signatures of witnesses or a notary public acknowledgment. Notarization is necessary because it prevents fraud and ensures that the person signing the deed is the rightful owner. It also provides assurance to both parties and makes the transaction binding and enforceable. Notarization requirements vary by state. 

In addition to the above, a grant deed must include a statement as to what warranties or assurances are included. 

Assurances provided

Grant deeds are popular because they provide a certain level of legal protection to both the buyer and seller. These are known as warranties or assurances. However, the legal document must specify these assurances in order to provide a secure title transfer. 

The following warranty statements are most important: 

• Grantor warrants they have legal and lawful ownership of property.
• Grantor warrants that they have the legal right to transfer ownership of property. 
• Grantor warrants that said property is free and clear from all liens and encumbrances incurred during the period of the Grantor's ownership, except for any restrictions or easements of record mentioned in the deed.

In some states, grant deeds have implied warranties. The nature of the warranties may be implied by the title of the deed without the necessity of stating them in the deed itself. For example, if the deed is titled “Grant Deed," the warranties provided in the state law automatically apply. An attorney, because of their knowledge of state law and legal terms, can explain the nature and extent of assurances provided by a specific grant deed. LegalZoom’s network of attorneys can even draft a deed for your property transfer.

Uses of deeds 

The type of deed used depends upon both the relationship between the grantor and grantee and on the nature of the property transfer.

• Grant deeds. A grant deed is most commonly seen when the grantee is acquiring title in a tax or foreclosure sale.
• General warranty deeds. A general warranty deed will almost always be required when the buyer is obtaining a mortgage to finance the purchase.
• Quitclaim deed. As it provides no warranties, quitclaim deed transfers are suitable for transferring property between family members, such as an inheritance or gift.  

A grantor would ideally prefer to give a quitclaim deed because it frees them of liability for any title problems. On the other hand, the grantee is best protected by a general warranty deed. A grant deed can be viewed as a middle ground, offering the grantee a degree of protection somewhere between a quitclaim and a general warranty deed.

FAQs

What happens if there is a dispute over the property after a grant deed is used?

In the unfortunate scenario of a title dispute or payment issue, after the use of a grant deed, the current owner or “grantee” is typically responsible for fighting the claim. Hiring legal representation, conducting title searches, and accumulating evidence can help you come out on the winning side of this battle. 

How is a grant deed recorded?

The grantee is responsible for recording with the County Clerk at their local County Recorder or Recorder of Deeds Office where the property is located. You will have to bring the original grant deed, proof of identity, and other required documents, such as a property tax statement or affidavit of property ownership, to the office. The recording fee is dependent on the county your property is in and its value. 

Once recorded, the grant deed becomes part of public records. You may be required to submit the recorded deed to relevant parties like utility companies or homeowners associations. The exact procedure and recording fees vary by state and locality, so speak to a real estate attorney for the latest information. 

What’s the difference between a grant deed and a mortgage? 

A grant deed transfers ownership from the seller to the buyer. A mortgage is a financial agreement between a borrower and lender and is used to secure a loan against a property. The person taking out the mortgage promises to pay the lender via a predetermined payment method, usually monthly payments. If the borrower defaults, the lender can claim ownership of the property. 

Is a grant deed the same as a deed of trust? 

Both are important real estate documents, but they aren’t the same. A deed of trust works similarly to a mortgage payment and is used to take a loan against the property. However, a neutral third party, like a title company, will hold ownership of the property until all payments are completed. 

Which deed is the best to use? 

It comes down to your circumstances and the protection you're seeking. Basically, if you are the one acquiring title, a grant deed is preferable to quitclaim deeds but not as good as general warranty deeds. An interspousal grant deed is best used to transfer property between spouses as it doesn’t trigger property taxes. A real estate lawyer can accurately advise you on which deed would be best for your real estate transaction. 

Regardless of what type of deed is used, it is advisable to obtain title insurance to be as fully protected as possible.

Edward A. Haman, Esq. contributed to this article.