We hope this Glossary of Mortgage and Real Estate Terms helps you understand the home buying and financing process. Should you have any further questions, please do not hesitate to contact your Loan Officer for answers.

Additional Terms: # A B C D E F G H I J K L M N O P Q R S T U V W XYZ

 

L Terms

Laches: Undue delay or negligence in asserting one's legal rights possibly leading to estoppel of the negligent party's suit. 

 

Land: The surface or part of the surface of the earth. Land is real property and added improvements are distinguished from the land.  The legal rights of land of include air rights, limited to some defined altitude and extend down through the center of the earth. 

 

Land Banking: The buying of land that is not presently needed for use but held for possible use in the future. 

 

Land Contract: A real estate installment selling arrangement, whereby the buyer may use, occupy, and enjoy land, but no deed is given by the seller, so title does not pass, until all or a specified part of the sale price has been paid.  Same as contract for deed and installment land contract. 

 

Land Development Loan: A loan that finances subdivision costs and/or improvements to real estate. Also see building loan and construction loan.

 

Land Lease: Only the ground/earth is covered by the lease. Also see ground lease.

 

Land Loan: A loan for the acquisition of land without any improvements thereon. Usually held in anticipation of zoning and until plans are drawn and construction financing can be obtained.

 

Landlocked: The condition of a lot that has no access to a public thoroughfare except through an adjacent lot. Also see egress and easement.

 

Landlord: One, the lessee, who rents a property to another called a lessor.  The property owner who surrenders the right to use property for a specific time in exchange for the receipt of rent.

 

Landmark: A fixed object serving as a boundary mark for a tract of land.  Same as monument. 

 

Land Residual Technique: In an appraisal, a method of estimating the value of land when given the net operating income (NOI) and value of improvements.  Used for feasibility analysis and highest and best use.  Also see income approach. 

 

Land Sale-Leaseback: The sale of land and simultaneous leasing of it by the seller, who becomes the tenant of the buyer. 

 

Landscape Architect: A professional who designs building sites, subdivisions, and other projects which require work on drainage, grading, vegetation, installation of utilities and site improvements. 

 

Land Survey: An instrument that specifies precise property boundaries. It is useful in determining if boundary violations (encroachments) exist.

 

Land, Tenements, and Hereditaments: A phrase used in early English law to express all sorts of real estate. 

 

Land Use Intensity: A measure of the extent to which a land parcel is developed in conformity with zoning ordinances. 

 

Land Use Planning: An activity, generally conducted by a local government, that provides public and private land use recommendations consistent with community policies.  Generally used to guide decisions on zoning. 

 

Land Use Regulation: Government ordinances, codes, and permit requirements, intended to make the private use of land and natural resources conform to policy standards.  Also see zoning. 

 

Land Use Succession: A change in the predominant use of a neighborhood or area over time.  Also see neighborhood life cycle. 

 

Latent Defects: Flaws that are hidden but will most likely surface later. 

 

Late Charge: An additional charge a borrower is required to pay as a penalty for failure to pay a regular mortgage loan installment when due; a penalty for a delinquent payment.

 

Lease: A written agreement stating the conditions for the possession and use of real estate (and/or personal property) given by the owner (landlord) to another person (the tenant) for a specified rent and period of time.

 

Leasehold: The interest or estate on which a lessee (tenant) of real estate has a lease. 

 

Leasehold Mortgage: A lien on the tenant's interest (leasehold) in real estate. 

 

Lease With Option To Purchase: A lease that gives the lessee (tenant) the right to purchase the property at an agreed-upon price under certain conditions. 

 

Legal Age: The official standard of maturity upon which one is held legally responsible for one's acts. Contracts for the sale or lease of real estate by a minor are void able by the minor. 

 

Legal Description: Legally acceptable identification of real estate most commonly by book and page or metes and bounds.

 

Legal Name: The name one has for official purposes versus how one may be commonly know.. 

 

Legal Notice: Notification of others using the method as required by law.

 

Legatee: One who receives property by will.  Also see devisee. 

 

Lessee: A person to whom property is rented under a lease. 

 

Lessor: One who rents property to another under a lease. A landlord.

 

Let: To rent a property to a tenant. 

 

Letter of Commitment: A document stating the borrower loan approval subject to any conditions - the terms and conditions of the loan.

 

Letter of Credit: An arrangement, with specified conditions, whereby a bank agrees to its credit for a customer. 

 

Letter of Demand (Payoff Statement): A prepared, formal statement showing the current status of the loan account, all sums due on a date certain to fully pay the loan balance, and the daily rate of interest (per diem charge).

 

Letter of Intent: The expression of a desire to enter into a contract without actually doing so or being committed. 

 

Level Payment Income Stream: An annuity. 

 

Level Payment Mortgage: Requires the same payment each month for full amortization.

 

Leverage: The use of borrowed money to increase one's return on a cash investment. For leverage to be profitable, the rate of return on the investment must be higher than the cost of the money borrowed. Leverage has the potential to magnify profits or losses.

 

Levy: To legally impose or collect that which is due. 

 

Liability: 1. A debt or financial obligation.  2. A potential loss.. 

 

Liability Insurance: Protection for a property owner from claims from injuries or damage to other people or their property. 

 

Liable: Responsible or obligated.

 

License: 1. Permission.  2. A right granted by a state to operate in a certain business or trade.

 

Licensee: One who holds a license.

 

Licensing Examination: A test given to a prospective licensee's to determine their ability in a trade of profession. 

 

Lien: A legal encumbrance or claim of one person on the property of another as security for a debt.

 

Lienholder: Any person or organization who holds a legal claim over the specific property of another as security for debt.

 

Life Estate: A freehold interest (in real property) that expires upon the death of the owner or some other specified person (see Pur Autre Vie). 

 

Life of Loan Cap: A contractual limitation on the maximum interest rate that can be applied to an adjustable rate mortgage during the entire term of the loan.

 

Life Tenant: One who is allowed the use of a property for life or the lifetime of another designated person. Also see life estate. 

 

Like Kind Property: Property having the same nature.  Also see 1031 Tax Deferred Exchange. 

 

Limited Liability: The restriction of one's potential losses to the amount invested.  The absence of personal liability.

 

Liquidate: To dissolve a business or asset for cash.

 

Liquidated Damages: An amount agreed upon in a contract that one party will pay the other in the event of a breach of contract. 

 

Lis Pendens: Latin: "suit pending."  Recorded notice of the filing of a suit, the outcome of which may affect title to a certain land.

 

Listing: 1. a written engagement contract between a principal and an agent, authorizing the agent to perform services for the principal involving the latter's property.  2. a record of property for sale by a broker who has been authorized by the owner to sell. 3. The property that is "listed". 

 

Listing Broker (Agent): The licensed real estate broker (agent) who secures a listing of the property. Versus the selling broker (agent) who secures the buyer. 

 

Litigation: The act of carrying on a lawsuit. 

 

Littoral: Part of the shore zone of a large body of water.

 

Liquidity: The amount an individual or entity holds in cash, checking and savings accounts, and other assets quickly convertible to cash.

 

Loan: The letting out or renting of money by a lender to a borrower, to be repaid with or without interest.

 

Loan Balance: The amount of principal that a borrower owes.

 

Loan Balance Cap: Only applicable to adjustable-rate mortgages (ARMs) with deferred interest or negative amortization (see Deferred Interest). Because the loan balance may increase with ARMs, many lenders place limits on how much deferred interest may be added to the original loan balance. If, during the life of the loan, the unpaid principal owed exceeds this limit, the borrower can no longer defer interest. The monthly payment must be increased (perhaps significantly, resulting in "payment shock") to pay all monthly interest due and enough of the monthly principal to fully payoff the loan within its remaining life.

 

Loan Commitment: Same as a Letter of Commitment. 

 

Loan Closing: A meeting between borrower (and seller) and lender in which transfer of ownership is accomplished, funds and deed are exchanged, and all loan documents, including the promissory note and mortgage, are signed.

 

Loan Modification: Any change in the terms of the loan, any change in the property, or any change in borrower's liability for the loan.

 

Loan Origination Fee: Same as origination fee. 

 

Loan Points: Same as discount points. 

 

Loan Portfolio: The total of all the loans that a financial institution or other lender holds at a given time. A list, distribution or grouping of mortgage loans.

 

Loan Servicing Department: The division of a mortgage lending institution that is responsible for servicing the terms and conditions of the loan. The duties of a loan servicing department include the collection of payments, interest, principal, trust items such as hazard insurance and taxes, and conducting foreclosures. Servicing duties also consist of operational procedures covering accounting, bookkeeping, insurance, tax records, loan payment follow-up and loan analysis.

 

Loan to Value (LTV): Mathematical computation that compares the loan amount to the value of the property.  LTV equals the loan amount / property value.

 

Loan-to-Value Ratio: The ratio, expressed as a percentage, of the amount of a loan (numerator) to the value or selling price of real property (denominator). Usually, the higher the percentage, the greater the interest charged. Maximum percentages for banks, savings and loans, or government-insured loans are set by statute.

 

Lot (Land) Equity: If a borrower owns the land and is seeking a mortgage for a home under construction, the value of the land may be recognized as a down payment equivalent to cash.

 

Lot Line: A line bounding a lot as described in a property survey.

 

LTV: See Loan to Value and Loan-to-Value Ratio.