Owning real estate with your Solo 401k can be a valuable investment, with the potential of attractive long-term returns. A grant deed is a legal document used to transfer ownership of a certain property from one party to another and is often required if you are transferring the property from a retirement account you own (like an IRA) to your Solo 401k trust.
What is a Grant Deed?
Grant deeds document the sale or transfer of real property from one person or entity to another. The person/party transferring their interest is the grantor. The person or entity receiving the property is the grantee. Typically the signatures must be notarized. A signed/notarized copy of the document is typically recorded with the County Recorder (which is generally public record).
What's Outlined In a Grant Deed?
Typically the grantor (seller) is making two promises in a grant deed:
They guarantee the property has not been sold to anyone else
The house is not under any liens (that have not already been disclosed to the grantee)
Why would I need a Grant Deed?
If you own real estate in a self-directed IRA or IRA LLC and you want to transfer the ownership to your Solo 401k trust, you will need a grant deed to document the transfer.
Typically, a grant deed is created with an attorney when a property investor plans on selling that property OR transferring the property from one entity to another (ie. IRA to Solo 401k). This deed is crucial as it shows the property type, investment conditions or assurances, and proof of ownership. When transferring the title of a property, a grant deed is necessary to validate the ownership and to ensure there are no “gaps” in the title.
Grant Deed Structure
There are generally two parties in a grant deed: the grantor (who's transferring the property), and the grantee (who's receiving the property).
In the case of transferring assets from a self-directed IRA to the Solo 401k, the IRA would be the grantor, and the Solo 401k trust would be the grantee. Again, this document will typically need to be notarized. Sometimes the grant deed will require different specifications state by state.
How to Transfer a Property with a Grant Deed
Get a fair market appraisal on your property from a real estate agent to determine property value
Work with your attorney to draw up a grant deed. In this case, your IRA would be the grantor and your 401k trust would be the grantee. The IRA custodian may need to sign as grantor if your IRA is not checkbook controlled
Sign the grant deed as grantee (401k trustee accepting ownership)
Notarize the grant deed and record it with the County Recorder
Sign into your Solo 401k Dashboard and create a Rollover Request including the property under the “in-kind transfer” section
Send all paperwork to the releasing custodian. This might include:
401k rollover packet with in-kind asset transfer instructions
Fair market valuation
Prepared grant deed.
The releasing custodian will sign the form and grant the deed effectively transferring the property into the Solo 401k trust.
Always document the incoming rollover asset in your Solo 401k plan records. Remember, you are the plan administrator so you need to keep track of all funds and assets coming in and going out of your Solo 401k plan.