Grantor

A grantor is the party who transfers an ownership interest in real property to another party — the grantee — through a deed or other conveyance instrument. The grantor must have a legal interest in the property to transfer and must execute the deed voluntarily for the conveyance to be valid. In mortgage note investing, the grantor appears in multiple transaction types: deed-in-lieu agreements, property sales, quit claim transfers, and recorded assignments of mortgage.

The Grantor's Role in Property Conveyance

Every transfer of real property requires a grantor and a grantee. The grantor is the party giving up their interest; the grantee is the party receiving it. For a conveyance to be legally effective, the grantor must:

• Hold a transferable interest — the grantor can only convey what they actually own
• Have legal capacity — the grantor must be of sound mind and legal age
• Execute the deed voluntarily — conveyances made under duress are voidable
• Sign and deliver the deed — the grantor's signature must be notarized and the deed must be delivered to the grantee
• Identify the property — the deed must include the legal description of the property

Once the deed is signed, notarized, and recorded at the county recorder's office, the transfer becomes part of the public record and the property's chain of title.

Types of Deeds and Grantor Warranties

The level of protection a grantor provides to the grantee depends on the type of deed used:

The distinction matters for note investors. When reviewing a property's title history during due diligence, the type of deed used in each transfer reveals how much confidence the parties had in the title at the time of conveyance.

Where Note Investors Encounter the Grantor

Deed-in-Lieu of Foreclosure

In a deed-in-lieu agreement, the borrower acts as the grantor, voluntarily transferring the property to the note holder (the grantee) in exchange for release from the mortgage obligation. The deed-in-lieu document must clearly identify the borrower as the grantor and include language confirming that the transfer is voluntary and made without duress. This voluntary nature is critical — if the borrower later claims coercion, the entire conveyance can be challenged.

Quit Claim Deed Transfers

One of the most common title surprises in non-performing loan due diligence is discovering that the borrower on the data tape is no longer the property owner. Frequently, the borrower (as grantor) executed a quit claim deed transferring the property to a family member, spouse, or LLC. Because quit claim deeds carry no grantor warranties, all existing liens survive the transfer — meaning the note investor's mortgage remains attached to the property regardless of the ownership change.

Assignment of Mortgage

When a mortgage loan is sold from one holder to another, the selling entity acts as the grantor of the assignment, transferring their security interest in the property to the purchasing entity (the grantee). Each recorded assignment in the assignment chain names a grantor and grantee, and an unbroken sequence from originator to current holder is essential for the loan to be legally enforceable.

Grantor vs. Grantee at a Glance

Verifying the Grantor in Due Diligence

During title research, note investors trace every deed transfer in the chain of title to verify that each grantor was the rightful owner at the time of conveyance. A grantor who appears in the chain without a corresponding prior deed as grantee is a red flag — it may indicate a broken chain of title, a fraudulent transfer, or a recording error. These issues should be identified during the title search phase of due diligence and resolved before closing on the loan purchase.