What is a Grant Deed? What is a Note?

When purchasing a home you will hear these two terms from your Real Estate Agent, Lender (Mortgage Broker) or the Escrow Officer at the Title Company. So what do they mean?

Grant Deed

The most commonly used property deed to transfer title in California is the grant deed, although it is not against the law to use other types of deeds. There are two guarantees contained in a grant deed:

* The grantor states that the property has not been sold to anybody else.
* The grantor states that the property is not burdened by any encumbrances apart from those the seller has already disclosed to the buyer.

Grant deeds do not need to be recorded to be valid, nor do they need to be notarized to be valid, but most sellers do ask a notary to witness the deed, acknowledging that the seller is the person who signed the deed. And most buyers want the protection of recordation, to give "constructive notice to the world" that the property has been sold.

Under California law, and your state laws may differ, to be valid, a grant deed needs to contain six essential elements. Those six items are defined as:

* A written document.
* A clause that transfers title, called a granting clause.
* The names of the Grantor and the Grantee.
* A description of the property being transferred.
* Execution, delivery and acceptance. It must be signed by a competent grantor, meaning minors and those declared incompetent cannot sign a deed; given to the buyer while the seller is still alive (not after death) and accepted by the buyer.
* Grantor's signature.

Promissory Note:

A written, signed, unconditional promise to pay a certain amount of money on demand at a specified time. A written promise to pay money that is often used as a means to borrow funds or take out a loan.

The individual who promises to pay is the maker, and the person to whom payment is promised is called the payee or holder. If signed by the maker, a promissory note is a negotiable instrument. It contains an unconditional promise to pay a certain sum to the order of a specifically named person or to bearer—that is, to any individual presenting the note. A promissory note can be either payable on demand or at a specific time.

In conclusion:

The deed is recorded when you purchase a home that shows the change in ownership from seller to buyer.

The Promissory Note is recorded as a payment or lien against the property to pay the bank (mortgage) on time for the disclosed amount and terms that have been negotiated.