A.CRE

Grantee

In a real estate sale transaction, a grantee is the buyer of the property. In a sale transaction, the grantor conveys, or transfers, title through a deed to the grantee.

Putting ‘Grantee’ in Context

Scenario:

In suburban Denver, Colorado, a private individual named Sarah Watson is making her first foray into real estate investing. Sarah recently formed an LLC, Centennial Equity LLC, to acquire Alpine Heights Apartments, a well-maintained 24-unit market-rate apartment complex. The property, built in 1998, features a mix of one- and two-bedroom units with an average monthly rent of $1,600.

Sarah’s offer of $4.8 million was accepted by the seller, the property’s long-time owner. The deal involves a traditional financing structure: a 25% down payment ($1.2 million) and a mortgage loan for the remaining 75% ($3.6 million).

Role of Grantee in the Transaction:

In this transaction, Centennial Equity LLC is the grantee because it is the entity purchasing the property. The seller, operating as Alpine Property Holdings, is the grantor. The transfer of ownership will occur through a deed, which legally conveys title to the grantee.

Key Steps in the Process:

  • Title Search and Deed Preparation: A title company performed a title search to ensure Alpine Heights is free of liens or encumbrances. Once cleared, a general warranty deed was drafted, providing the highest level of protection to Sarah and Centennial Equity LLC.
  • Closing the Sale: At the closing, the grantor (Alpine Property Holdings) signed the deed, transferring ownership to the grantee (Centennial Equity LLC). The deed specifies the legal description of Alpine Heights Apartments, formally documenting the transfer.
  • Recordation: After closing, the title company recorded the deed with the county recorder’s office, making the ownership transfer public and official.

Why Understanding ‘Grantee’ Matters:

For Sarah, as the grantee, ensuring the deed and title are clear was a critical step to safeguard her investment. Being listed as the grantee in the recorded deed officially establishes Centennial Equity LLC’s ownership of Alpine Heights Apartments. Additionally, as the grantee, Sarah will be responsible for taxes, property maintenance, and compliance with any zoning or legal obligations.

Hypothetical Financial Snapshot of the Investment:

  • Purchase Price: $4.8 million
  • Down Payment: $1.2 million (25%)
  • Loan Amount: $3.6 million (75%)
  • Estimated NOI (Net Operating Income): $240,000 annually
  • Cap Rate: 5%

In this example, Sarah’s experience illustrates how the role of a grantee is integral in formalizing property ownership and ensuring a smooth transaction in a real estate sale.

Frequently Asked Questions about Grantee in Real Estate Transactions

A grantee is the buyer of a property in a real estate transaction. The grantee receives title to the property through a deed from the grantor (seller).

In this example, Centennial Equity LLC—formed by Sarah Watson—was the grantee, as it was the entity purchasing Alpine Heights Apartments.

Title is conveyed to the grantee through a deed. In this case, a general warranty deed was used, which offers the highest level of title protection to the grantee.

The grantee becomes responsible for property taxes, maintenance, and compliance with zoning and legal obligations once the deed is recorded and ownership is transferred.

Being named as the grantee legally establishes the buyer’s ownership of the property. It ensures the buyer’s rights are protected and publicly recorded through the deed.

Click here to get this CRE Glossary in an eBook (PDF) format.
by