Glossary of Terms - L


In a legal sense, the solid part of the surface of the earth, as distinguished from water; any ground, soil or earth whatsoever regarded as the subject of ownership and everything annexed to it, whether by nature, e.g., trees and everything in or on it, such as minerals and running water, or annexed to it by man; e.g., buildings, fences, etc. In an economic sense, land consists of all those elements in the wealth of a nation which is supposed to be furnished by nature as distinguished from those improvements which owe their value to the labor and organizing power of man.

Land Contract
Installment plan for buying a house. It is used as an alternative to obtaining a loan from a traditional source, such as a mortgage banker or savings and loan.  Also known as an Installment Sales Contract.

Late Charge
A penalty for failure to pay an installment on time.

Latent Defect
Hidden structural defect that cannot be readily ascertained by a normal visual inspection.

Lease with Option to Purchase
A lease under which the lessee has the right to purchase the property. The option may run for the length of the lease or only for a portion of the lease period.  A memorandum of the lease should be recorded in the recorder of deeds office to ensure notice to prospective purchasers.

Legal Description
An expanded and unique description of a property that is used on legal documents, such as deeds and deeds of trust and mortgages which enables a surveyor and/or owner of the property to locate the boundary lines of the property. Recorded documents generally require a legal description.

A general term encompassing all mortgagees, and beneficiaries under deeds of trust.

Lender's Instructions
A document that lenders prepare for the closing agent that outlines the requirements for loan closing.

One who possesses the right to use or occupy a property under a lease agreement.

One who holds title to and conveys the right to use and occupy a property under lease agreement to a Lessee (tenant).

Letter of Intent
A formal method of stating that a prospective developer, buyer or lessee is interested in property. Can be binding or non-binding on the parties depending on its terminology.

An encumbrance against property for the payment of debt; a lien may be a mechanic's lien, mortgage, unpaid taxes or judgment.

Life Estate
An estate in real property for the life of a living person, who generally occupies or enjoys the benefits (income) from the real property.  At the death of the life tenant, the estate reverts back to the grantor or to a third party.

Life Estate pur Autrie Vie

An estate in real property for the life of a living person who does not occupy or enjoy the benefits of the property.  Upon their death, the estate reverts back to the grantor or to a third party.

Limited Partnership
A partnership consisting of one or more general partners who conduct the business and are responsible for losses, and one or more special (limited) partners, who contribute capital and are liable only for the amount contributed.

Lis Pendens
A public notice that litigation is pending on a property. It must be filed in the courthouse.

A record of property for sale by a broker who has been authorized by the owner to sell. Also used to denote the property so listed.

Listing Agreement
Agreement between a property owner and a real estate broker, authorizing the broker to find a buyer for the property. If the sale is consummated, the listing broker will be paid a fee. (See "Exclusive Agency" in this Glossary)

Loan Discount/Premium Fees
Fees that borrowers pay (sometimes seller will pay for borrower) that adjust to the yield requirement of the investor. Loan discount denotes an investor yield requirement higher than the note rate. Loan premium denotes an investor yield requirement lower than the note rate.

Loan Lock
Guarantee from a lender that a borrower will receive the interest rate in effect at the time of loan application.

Loan Officer
A person that helps borrowers through the selection, processing, and closing of a mortgage loan. Loan officers can be paid a commission or salary for their services and can work for mortgage brokers, mortgage bankers, or depository institutions.

Loan Origination Fees
The cost to obtain a loan that is paid to the originating lender or broker.

Loan Package
The information regarding a borrower and property which is the basis for a lender's credit decision to extend or deny credit.

Loan Ratio
The amount of a loan to the value or selling price of real property, abbreviated as LVR.

Loan Servicing
The function of collecting loan payments, managing the property tax and insurance escrows, foreclosing on defaulted loans and remitting payments to the investor/beneficiary.

Loan-to-Value Ratio
The ratio of the mortgage loan amount to the property's appraised value or selling price, whichever is less, abbreviated as LVR.



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