Dictionary of Terms - L

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L

Laches: An equitable doctrine used by courts to bar a legal claim or prevent the assertion of a right because of undue delay or failure to assert the claim or right.
Land Capitalization Rate: The rate of return, including interest, on land only.
Land Contract: See installment contract.
Land Development Method: (See subdivision development method.)
Land Ratio (L%): The ratio of the land value to the total value of the property.
Land Residual Technique: A method of capitalization using the net income remaining to the land after return on and recapture of the building value have been deducted.
Land Trust: A trust originated by the owner of real property in which real estate is the only asset. Because the interest of a beneficiary is considered personal property and not real estate, a judgment against the beneficiary will not create a lien against the real estate. Thus land trusts are popular when there are multiple owners who seek protection against the effects of divorce, judgments or bankruptcies of each other.
Land: The earth's surface extending downward to the center of the earth and upward infinitely into space including things permanently attached by nature such as trees and water.
Land/Building Ratio: The proportion of land area to gross building area.
Landlocked Parcel: A parcel of land without any access to a public road or way.
Landlord: One who owns property and leases it to a tenant.
Late Charge: A fee imposed by a lender when the borrower does not make a payment on time.
Late Payment: A payment a lender receives after the due date has passed.
Latent Defect: A hidden structural defect that could not be discovered by ordinary inspection and that threatens the property's soundness or the safety of its inhabitants. Some states impose on sellers and licensees a duty to inspect for and disclose latent defects.
Lateral: (i) Of, relating to, or situated at or on the side or sides. (ii) An extension of a sewer line or septic system drain line.
Law Of Agency: See agency.
Leaching: The process of absorbing water into the ground from a waste disposal system.
Lease: A written document by which the rights of use and occupancy of land and/or structures are transferred by the owner to another person or entity for a specified period of time in return for a specified rental.
Lease Option: A lease under which the tenant has the right to purchase the property either during the lease term or at its end.
Lease Purchase: The purchase of real property through a lease, usually long term. Typically done for tax or financing purposes.
Lease: A written or oral contract between a landlord (the lessor) and a tenant (the lessee) that transfers the right to exclusive possession and use of the landlord's real property to the lessee for a specified period of time and for a stated consideration (rent). By state law leases for longer than a certain period of time (generally one year) must be in writing to be enforceable.
Leased Fee: The lessor's interest and rights in the real estate being leased.
Leasehold Estate: The interest in a property of a tenant (lessee) created by a lease. It is usually the right to occupy and use the property for a stipulated period of time in exchange for the payment of rent.
Leasehold: The limited interest in a property held by a tenant; primarily the right to inhabit it for a specified period of time. At the end of the lease, the property reverts to the owner or landlord.
Lease-Purchase: The lease purchase contract sets the closing date and provides remedies to the seller if the buyer defaults. (a type of delayed closing)
Legacy: A disposition of money or personal property by will.
Legal Blemish: Blemishes on a piece of property such as a zoning violation or fraudulent title claim.
Legal Description: A statement containing a designation by which land is identified according to system set up by law or approved by law (i.e., Geodetic System, Metes and Bounds, Public Land System and Recorded Map).
Legal Description: A statement identifying land by a system prescribed by law. (See also lot and block system, metes and bounds description and rectangular survey system.)
Legally Competent Parties: People who are recognized by law as being able to contract with others; those of legal age and sound mind.
Lender: A bank, savings institution or mortgage company that offers home loans.
Less Favorable Treatment: Any time a person is treated differently on the basis of race, sex, religion, color, familial status, handicap or national origin, either by action or inaction, in the selling or leasing of real property, it is a violation of the Fair Housing Laws.
Lessee: One who possesses the right to use or occupy a property under lease agreement.
Lessee's Interest: An interest having value only if the agreed-on rent is less than the market rent.
Lessor: One who holds title to and conveys the right to use and occupy property under lease agreement.
Lessor's Interest: The value of lease rental payments plus the remaining property value at the end of the lease period.
Letter Of Opinion: Report of property value that states the appraiser's conclusion of value or a range of values and provides only a brief summary of the supporting data and appraiser s analysis.
Letter Of Transmittal: First page of a narrative appraisal report, in which the report is formally presented to the person for whom the appraisal was made.
Leverage: The use of borrowed money to finance an investment.
Levy: (i) To assess to seize; to collect. To levy a tax is to assess a property and set the rate of taxation. To levy an execution is to officially seize the property of a person in order to satisfy an obligation. (ii) the amount assessed, seized or collected.
Liabilities: A borrower's debts and financial obligations.
Liability Insurance: An insurance policy that protects owners against claims of negligence, personal injury or property damage.
LIBOR: Acronym for "London Interbank Offered Rate." An index used to determine interest rate changes for adjustable rate mortgages. Very popular index for interest only mortgage programs.
License: (1) The revocable permission for a temporary use of land-a personal right that cannot be sold. (2) Formal permission from a constituted authority (such as a state agency) to engage in a certain activity or business (such as real estate appraisal.)
Lien Theory: Some states interpret a mortgage as being purely a lien on real property. The mortgagee thus has no right of possession but must foreclose the lien and sell the property if the mortgagor defaults.
Lien: A right given by law to certain creditors to have their debts paid out of the property of a defaulting debtor, usually by means of a court sale.
Lies Pendens: A recorded legal document giving constructive notice that an action affecting a particular property has been filed in either a state or a federal court.
Life Cap: Limits the amount a loan's interest rate can change during the mortgage term. For example, if the rate on an adjustable-rate mortgage begins at 4 percent and has a life cap of 6 percentage points, it can not go over 10 percent.
Life Cycle Costing: In property management comparing one type of equipment with another based on both purchase cost and operating cost over its expected useful lifetime.
Life Estate: An interest in real or personal property that is limited in duration to the lifetime of its owner or some other designated person or persons.
Life Tenant: A person in possession of a life estate.
Lifetime Payment Cap: For an adjustable-rate mortgage (ARM), a limit on the amount payments can increase or decrease over the life of the mortgage.
Lifetime Rate Cap: A maximum interest rate or "ceiling" that may not be exceeded under any circumstances over the entire life of the loan.
Limited Partnership: See partnership.
Linkage: The time and distance relationship between a neighborhood and its economic or physical support facilities.
Liquid Assets: Cash and all other assets that can be converted to cash relatively quickly. Liquid assets can include money in savings and checking accounts, money-market accounts and most CD's.
Liquidated Damages: An amount predetermined by the parties to a contract as the total compensation to an injured party should the other party breach the contract.
Liquidity: The ability to sell an asset and convert it into cash at a price close to its true value in a short period of time.
Listing Agreement: A contract between an owner (as principal) and a real estate broker (as agent) by which the broker is employed as agent to find a buyer for the owner's real estate on the owner's terms for which service the owner agrees to pay a commission.
Listing Broker: The broker in a multiple-listing situation from whose office a listing agreement is initiated as opposed to the cooperating broker from whose office negotiations leading up to a sale are initiated. The listing broker and the cooperating broker may be the same person.
List-Price Ratio: The relationship between the listing price and the selling price. Most data services such as MLS provide a statistical analysis of the ratio. Though it is called a ratio, it is typically expressed as a percentage.
Littoral Rights: (1) A landowner's claim to use water in large navigable lakes and oceans adjacent to his or her property. (2) The ownership rights to land bordering these bodies of water up to the high-water mark.
Living Trust: An arrangement in which a property owner (trustor) transfers assets to a trustee, who assumes specified duties in managing the asset. After the payment of operating expenses and trustee's fees, the income generated by the trust property is paid to or used for the benefit of the designated beneficiary. The living trust is gaining popularity as a way to hold title and avoid probate of trust assets.
Loan Application Fee: A fee charged by lenders to cover expenses incidental to reviewing a loan application.
Loan Application: A document that details a borrower's income, debt and other obligations to determine credit worthiness. Also includes information on the subject property.
Loan Commitment: A promise by a lender or other financial institution to make or insure a loan for a specified amount and on specific terms.
Loan Officer: An official lending institution representative who is empowered to act on behalf of the lender within certain limits.
Loan Origination Fee: A fee charged to the borrower by the lender for making a mortgage loan. The fee is usually computed as a percentage of the loan amount.
Loan Term: The time set by a lender for a buyer to pay a mortgage. Most conforming loans have 30 or 15-year terms.
Loan-to-Value Ratio: The ratio of mortgage loan to the value of security pledged. It is usually expressed as a percentage.
Loan-to-value Ratio (LTV): The ratio of the total loan amount to the value of the property. For lending purposes, the property value is equal to the purchase price or the appraised value, whichever is lower.
Locational Obsolescence: The loss in value of a property due to the surrounding properties and/or neighborhood in which the property is located.
Lock-in Period: A period of time during which the borrower is guaranteed an agreed-upon interest rate, even if market rates rise. The longer the period, the higher the cost (in points) to the borrower.
Lock-in: A lender's commitment to a borrower to guarantee (or "lock in") a specific interest rate for a limited amount of time.
Long-Lived: The components of a structure that are not expected to be replaced during the physical life of the improvement. Examples would be foundation, framing, rafters and joists.
Lot And Block System: Method of legal description of an individual parcel of land by reference to tract, block and lot numbers and other information by which the parcel is identified in a recorded subdivision map. Also called lot, block and tract system and subdivision system.
Lot-and-block (recorded Plat) System: A method of describing real property that identifies a parcel of land by reference to lot and block numbers within a sub division as specified on a recorded subdivision plat.
Low-documentation Loan: A home loan that requires only minimal verification of income and assets.





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