Grant Deed in Real Estate: What It Is, Examples, and Types

What Is a Grant Deed?

A grant deed, also known as a special or limited warranty deed, is a legal document used to transfer real estate between a previous owner (the grantor) and a new owner (the grantee). A grant deed warrants that:

1. The grantor has not transferred the property to anyone else, and
2. The property was not encumbered when the grantor held title except as noted in the deed. The grantor doesn't guarantee against any title defects that may have existed before taking possession of the property.

A grant deed must be in writing and include the names of the grantor and grantee, a legal description of the property being transferred (i.e., lot number, tract number, city, county, and state), words of conveyance—for example, "grant, bargain, sell, and convey"—and the grantor's signature.

Uses and Content of a Grant Deed

A deed is a legal document that, when executed and delivered, conveys title to or an interest in real estate from a seller to a buyer. There are a variety of deeds, including quitclaim deeds, general warranty deeds, and grant deeds. Each type of deed offers different levels of protection (and risks) to buyers and sellers.

A grant deed includes two warranties: that the grantor received title, and that the property was unencumbered by the grantor. It does contain any information to pay legal costs if a title claim needs to be defended. It also does not provide any warranties to claims made before the title was acquired by the grantor.

This type of deed offers less protection to buyers than a general warranty deed—a deed in which the grantor fully warrants good clear title to the property; however, a grant deed offers more protection to buyers than a quitclaim deed, which has no express or implied covenants or warranties.

Uses

Grant deeds are often used to transfer real estate in conjunction with tax and foreclosure sales. Grant deeds are seen as a middle ground between quitclaim deeds and general warranty deeds as it provides a level of protection between the two.

There are several types of grant deeds, depending on who transfers property to whom. For example, an interspousal transfer grant deed is used to transfer real estate from one spouse to another (often during a divorce).

Content

All deeds must contain the names of the grantor and grantee, the date, an overview of the property being transferred, as well as the signature of the grantor. A majority of deeds will require the stamp of a notary as well as the signatures of witnesses.

In addition to the above, a grant deed will contain a statement of the warranties included. The overall content and format of a grant deed will depend on the state law in which the property is located.

Real Estate Investing Considerations

Real estate, including real property, is often described as an asset class along with stocks, bonds, cash, and alternative investments such as private equity and venture capital.

As an investment, real estate is unique in that its location significantly impacts prices. For example, residential real estate values are affected by local factors such as the area's employment rate, economy, crime rates, transportation facilities, quality of schools, and other municipal services, along with property taxes.

In commercial real estate, which is often more valuable per square foot than residential real estate, these factors are also pertinent, although less so. Commercial rental real estate is more heavily regulated than residential real estate, with specific regulations existing between countries, states, and even cities and counties. Zoning regulations can add further complexity to commercial real estate investments along with the risk of tenant turnover.

Those interested can invest directly in real estate (where grant deeds might come into play) or indirectly by buying shares in real estate investment trusts (REITs) or mortgage-backed securities (MBS).

Other Types of Deeds

There are other variations of a deed, including (but not limited to):

• General Warranty Deeds: A general warranty deed provides the most protection to the buyer but gives the grantor the highest degree of liability. The grantor of a general warranty deed fully warrants good clear title to the property. This type of deed is used in most real estate deed transfers.
• Quitclaim Deeds: Also called a non-warranty deed, a quitclaim deed does not warrant clear title, or guarantee that the grantor has a legal right to transfer the property. It provides the grantee with the least protection of any deed and is often used to fix title errors and transfer property between family members.
• Tax Deeds: This is a legal document granting ownership of a property to a government body when the owner fails to pay any associated property taxes. A tax deed gives the government agency the authority to sell the property to collect delinquent taxes. Once sold, the property is then transferred to the purchaser. These transactions are called “tax deed sales” and are usually held at auctions.

The Bottom Line

A deed is a written document that conveys title to or an interest in real estate when executed and delivered. Grant deeds fall in the middle of the spectrum in terms of buyer protections—they offer more protection than quitclaim deeds but less than general warranty deeds.

A deed determines the grantor's obligations and the degree of protection the grantee receives. As such, it's essential to understand the type of deed used in a real estate transaction—whether you're the buyer or the seller. Similarly, real estate laws vary by state. Consult with a qualified real estate attorney, broker, or agent if you have questions.