Glossary

There are 399 entries in this glossary.

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L

Term	Definition
Land Contract	Acontract for the purchase and sale of land A contract in which a purchaser of real estate, upon making an initial payment, agrees to pay the seller stipulated amounts at specified intervals until the total purchase price is paid, the seller retaining legal title to the land as security for the payments.

Land Lease	See Ground Lease.

Land Trust	A revocable living trust that is generally used to hold title to real estate for the purposes of privacy and anonymity. Also known as an Illinois Land Trust or Nominee Trust. The land trustee is a nominal title holder. Beneficiaries have the exclusive right to control and direct the trustee’s actions.

Landlocked	A lot with no access to public thoroughfare except through an adjacent lot is said to be landlocked.

Lease	A contract in which a lessor transfers the rights to possession of a property to a lessee for a certain period of time.

Lease Option	A lease combined with an option agreement. This agreement gives the lessee the right to purchase the leased property under certain conditions.

Lease Purchase	A lease combined with a purchase agreement. Under this agreement, the lessee is obligated to purchase the leased property under certain conditions.

Leasehold	The interest or estate on that a lessee’s lease is applied to.

Leasehold Estate	A method of holding title to a property. In this method, the mortgagor does not own the property, but instead has a recorded long-term lease on it.

Legal Blemish	Any detrimental blemishes on a piece of property, for example, a fraudulent title claim or zoning violation.

Legal Description	A legally acceptable identification of real estate obtained by a government survey, recorded plat, or metes and bounds.

Lessee	Under a lease, a person to whom property is rented.

Lessor	A person who rents property to another person under the terms of a lease.

Let	The act of renting a property to a tenant (lessee).

Letter of Intent	A written letter from one party to another that expresses the desire to enter into a contract without actually doing so.

Liabilities	A person's financial obligations and/or debts. These include both long-term and short-term debt, in addition to potential losses from legal claims.

Liability Insurance	Insurance coverage against claims alleging that a property owner's inappropriate action and/or negligence resulted in bodily injury or property damage to another person. See also Homeowner’s insurance.

Lien	A claim on another person’s property as security for money owed. Types of liens include judgments, mortgages, mechanic's liens, and unpaid taxes.

Lien Theory State	A state in which the legal title of a mortgaged property belongs to the mortgagor (borrower), with the mortgage as a lien against the property. Example: Texas. See Title Theory State for contrast.

Life Estate	An interest in a property that is terminated upon the death of a certain person.

Life Tenant	A person who is allowed to use property for life or, in some cases, the lifetime of another designated party.

Lifetime Cap	The highest amount that an adjustable mortgage can be raised over the initial interest rate. These caps usually fall within the range of 5.0% - 7.0%. For example, if the initial interest rate is 5.25% and the lifetime cap is 6.0%, the highest interest rate a borrower might be required to pay during the life of the loan would be 11.25% (5.25% + 6.0%).

Like-Kind Property	Property that shares the same nature.

Limited Partnership	A partnership in which at least one partner is passive and whose liability is limited to the amount invested. There also must be at least one partner whose liability extends beyond just monetary investment.

Line Of Credit	An agreement by a lender to extend credit up to a given amount for a given period of time without requiring the borrower to file a new application.

Liquidated Damages	An agreed amount stated in a contract that one party will pay another in the event of a breach of contract.

Liquidity	The ease of changing assets into cash.

Lis Pendens	A Latin term meaning "suit pending." The recorded notice of a lawsuit’s filing. The outcome of the lawsuit may affect title to a real property.

Listing	A written agreement between a principal and an agent that authorizes the agent to perform services for the principal that involve the principal's property.

Loan Application (1003)	A loan application necessary for conforming loans. This application is now considered the standard application for most residential loans, even non-conforming loans.

Loan Origination Fee	In most cases, a lender will charge a borrower an origination fee, or "points," to process a loan. A point is equal to one percent of the total loan amount.

Loan Package	An organized group of documents containing all of the necessary information to obtain an underwriting decision of loan approval or loan denial. A package may contain some or all of the following documents, depending on the type of loan and lender: loan application, statement of use of funds, statement of net worth, P & L statements, pay stubs, tax returns, statements from various types of banking and investment accounts, letters of explanation, property appraisal, verification of employment, credit report, verification of housing payments, purchase agreement, etc. (See definition of "underwriting" below.)

Loan-to-Value (LTV)	The ratio of a loan’s amount to the value of the property. If the loan is $80,000 and the value of the property is $100,000, this means that the LTV is 80%.

Lot and Block	A means of identifying a property’s legal description. See Legal Description.

Lot Line	A line that bounds a lot. The line is described in a property survey.

Low-Documentation Loan	A mortgage requiring only a very small amount of verification of assets and income.

Low-Down-Payment loan	A home loan requring the borrower to make a small down payment before he or she obtains the necessary financing for purchase of a house.