DEFINITION of Grant Deed
A grant deed is a legal document used to transfer ownership of real property. A grant deed contains the name of the person or entity transferring the property (the grantor); the legal description of the property being transferred (i.e., lot number, tract number, city, county and state); and the name of the person or entity that the property is being transferred to (the grantee). The grant deed shows that the title has not already been granted to another person.
BREAKING DOWN Grant Deed
Numerous types of grant deeds may be used, depending on who is transferring property to whom. For example, an interspousal transfer grant deed is used to transfer ownership of real property from one spouse to another (often during a divorce). Real property consists of land and any property attached directly to it (such as buildings, ponds, canals, roads and machinery) and can also entail the right to use, control and dispose of the land.
A transfer with a grant deed does not cause the property's value to be reassessed for property tax purposes. A notary usually witnesses the actual signing of a grant deed, and the grantee usually pays a small fee to record the deed with the county government.
Grant Deed and Real Estate Investing
Real estate, including real property, is often described as an asset class, along with stocks, bonds, cash, and alternative investments like private equity and venture capital. Grant deeds often help in the transfer of real estate from one owner to another.
Real estate sales are unique in that the natural surroundings and immediate geographic area of properties significantly impact 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, also feels these factors although less acutely. Commercial rental real estate is more heavily regulated than residential real estate, with specific regulations existing between countries, states, even cities and counties. Zoning regulations can add a further layer of complexity to commercial real estate investments, along with the risk of tenant turnover.
One can invest directly in real estate (where grant deeds would come into play) or indirectly by buying shares in real estate investment trusts (REITs) or mortgage-backed securities (MBS).