In Florida, real estate transactions undoubtedly involve several legal terms and notions.
Two of the most important roles in real estate processes are that of the Grantor vs Grantee.
In accordance with Florida law, understanding the distinctions between these parties is essential for anyone involved in property transfers, whether as a buyer or a seller.
The purpose of this article is to provide a brief explanation regarding the differences between grantors and grantees in a real estate transaction, as well as, their rights and responsibilities pertaining to the transaction itself.
Grantor vs Grantee
The grantor and grantee are the two main parties to any given real estate transaction.
While the grantor is the individual or entity who, prior to the completion of the transaction, holds title to the property and intends to transfer that title to a different party.
This different party, the recipient of the property is known as the grantee of the transaction.
Grantor’s Role & Responsibilities
In the context of real estate transactions, the grantor and grantee each have specific roles and responsibilities during the course of the deal. According to Florida law, the following are a list of the grantor’s responsibilities:
- Deliver a Valid Deed to the grantee: In every real estate transaction, the grantor is responsible for delivering a valid deed that transfers title to the property from the grantor to the grantee. This is done through various types of deeds, most commonly a warranty deed, quitclaim deed, or a special warranty deed. The difference between each of these deed instruments is the extent of the grantor’s guarantees or responsibilities regarding the title to the property.
- Providing Clear Title: To the extent guaranteed by the transfer deed, the grantor must warrant that the title is free of liens and encumbrances, as well as, claims from third parties that could impact the grantee’s ownership of the subject property.
- Quiet Enjoyment Covenant: Similarly, the responsibility of assuring that the grantee will be able to enjoy the property without significant interferences from third-parties claiming a superior title than the grantor falls on that party.
- Providing all Relevant Documentation to Grantee: By the conclusion of each transaction, the grantor is obligated to provide all related documents to the grantee including, but not limited, title insurance policies, legally required disclosures, surveys and other lien, title or permit searches.
Defining the Grantee’s Role & Responsibilities
Similarly, as the grantee is the recipient of the property, this party will also receive certain rights and responsibilities pertaining to the subject property at the conclusion of the transactions. This includes:
- Ensuring that the title is authentic and grantor in fact has ownership over the subject property that is being transferred. For this reason, it is always advisable for grantees to work with legal counsel when participating in real estate transactions.
- Adherence to Contractual Obligations: The grantee to a transaction must ensure that they are living up to the terms of the contract itself. Such terms may include paying the agreed upon purchase price and conducting any carved out inspections etc.
- The grantee must also ensure that the deed is recorded immediately after the conclusion of the transaction so that public records reflect the correct owner and so they are protected from any potential claims. Practically speaking, this is regularly done by the title agent assisting with the closing.
- At the conclusion of the transaction, the grantee becomes the legal owner of the property and assumes all rights associated with its ownership, including the right to occupy, use, enjoy, maintain, as well as, pay for all loans, insurance and taxes due.
How is property transferred from grantor to grantee?
As with many other states, in Florida, there are a few main types of transfer deeds that are used in real estate transactions that ultimately transfer ownership from a grantor to a grantee. The most common are:
- Warranty Deed: Financed purchases typically utilize warranty deeds to transfer ownership interest from a grantor to a grantee as it provides the greatest level of protection to the recipient and, ultimately, the lender. These deeds warrant against any encumbrances or claims against the property and promise clear title free from defects. With these types of deeds, the grantor agrees to defend the grantee from any claim arising from prior ownership. This is also where title insurance comes into play!
- Quitclaim Deed: Conversely, the quitclaim deed provides no assurances against encumbrances or third-party claims and is usually not used in arm’s length real estate transactions. These types of deeds are best suited for transactions amongst family members, when conducting estate planning exercises or when transferring property to one’s own trust or business entity. The grantor makes no promises and simply transfers whatever interest they may or may not possess.
- Special Warranty Deed: The least common of the three is the special warranty deed, which states the grantor’s warranty against only certain claims, usually those arising during their period of ownership and nothing prior to that time.
Important Considerations prior to Transferring Real Estate Property for the Grantor and Grantee
In Florida, to ensure that both parties benefit from the transaction and are not left at a disadvantage, it is always recommended that title insurance is obtained.
This insurance is obtained through a one-time premium payment and protects the grantee against title defects while serving as a way in which to mitigate potential issues arising after the conclusion of the transaction.
While a title agent who assists with a real estate transaction conducts several searches and checks, such as the title search, lien and permit search, as well as, a survey when applicable, it is always advisable that the grantor and grantee conduct their own due diligence to ensure that the transaction goes as smoothly as possible.
Having proper legal representation is always advisable. A real estate lawyer aids in ensuring the initial contract upon which the transaction is premised is sound and legally binding.
They also ensure compliance with relevant Florida law and safeguard the interests of their respective client.
Common questions received about the differences between the Grantor vs Grantee:
- “Is the grantor the buyer or seller?” As the term “grantor” usually refers to the party of the transaction who is giving away their interest or relinquishing their ownership rights in the real property, the grantor is usually the seller in the context of a real estate transaction. On the other hand, the term “grantee” refers to the recipient of the property and, therefore, is usually the buyer.
- “Is the grantee the borrower?” Although they may be one in the same, the terms “grantee” and “borrower” have two different roles in terms of real estate transactions. The grantee is the party who receives the property, asset or benefit, while the borrower is the party who obtains the financial assistance from a financial institution or lender to buy or finance the purchase of the property, asset or benefit. As it pertains to the traditional residential real estate transaction, the grantee is most times the borrower (albeit, not always!).
- “What is grantee vs payee?” In a traditional residential real estate transaction, the similarity in these two terms lies in the fact that they are both recipients of something. Whereas the “grantee” receives the property at the conclusion of the transaction, the payee receives payment for something exchanged. For example, if a real estate purchase is financed, then the lending entity would be the payee in exchange for the loaned funds. Similarly, if a check was issued the payee would be the name to which the check was written. So while the terms “grantee” is used when describing one party of a real estate transaction, the term “payee” refers to a party to a financial transaction.
- “What is the difference between grantor and settlor?” When compared, both terms are related to the creation of a trust agreement. This relates to real estate in that many properties are owned or held in a living trust. In this case, the “grantor” is the party contributing the asset while the “settlor” is the party who creates the trust agreement. Practically speaking, these individuals are most often one in the same when referring to the most common type of trust, the inter vivos or living trust, and while the terms are used interchangeably they do refer to distinct roles.
Grantor vs Grantee Conclusions
Florida real estate transactions must include a voluntary grantor and grantee.
While each party is necessary to have a successful transfer, their rights and obligations during the process are quite varied and different from each other.
Understanding the roles each party plays, as well as the tools they have at their disposal is crucial for a smooth transaction.
Whether the grantor or the grantee in a transaction in which real estate property is transferred, it is always advisable that each party seek the guidance of a Florida real estate professional to secure their best interests.
To learn more about how we may assist with your real estate transaction, contact us.
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