Real Estate Glossary

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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:
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 contract:
A land contract is a real property sales contract. (See contract for deed)
landfill:
A landfill is an enormous hole, either excavated for the purpose of waste disposal or left over from a surface mining operation. The hole is lined with clay or a synthetic lining to prevent leakage of waste into the surrounding water supply. Waste is laid on the liner at the bottom of the landfill and a layer of topsoil is then compacted into the waste. The layering is repeated again and again until the landfill reaches its full capacity.
landlord:
The lessor or the owner of leased premises. The landlord retains a reversionary interest in the property, so that when the lease ends the property will revert to the landlord. (See lease, lessor, lessee)
land trusts:
A few states permit the creation of land trusts, in which real estate is the only asset. As in all trusts, the title to the property is conveyed to a trustee, and the beneficial interest belongs to the beneficiary. In the case of land trusts, however, the beneficiary is usually also the trustor. While the beneficial interest is personal property, the beneficiary retains management and control of the real property and has the right of possession and the right to any income or proceeds from its sale.
One of the distinguishing characteristics of a land trust is that the public records usually do not name the beneficiary. A land trust may be used for secrecy when assembling separate parcels. There are other benefits as well. A beneficial interest can be transferred by assignment, making the formalities of a deed unnecessary. The beneficial interest in property can be pledged as security for a loan without having a mortgage recorded. Because the beneficiary's interest is personal, it passes at the beneficiary's death under the laws of the state in which the beneficiary lived. If the deceased owned property in several states, additional probate costs and inheritance taxes can be avoided.
latent defect:
A hidden structural defect that would 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. Buyers have been able to either rescind the sales contract or receive damages when a seller fails to reveal known latent defects. The courts have also decided in favor of the buyer when the seller neglected to reveal violations of zoning or building codes.
lateral support:
The right to have land supported by the adjoining land or soil beneath. (See subjacent support)
latitude:
Distance on the earth's surface, measured northward or southward from the equator measured in degrees of the meridian; angular distance reckoned on a meridian. (See longitude, meridian)
law of agency:
A fiduciary relationship is created under the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed real estate broker to be his or her agent. (See agent, fiduciary)
leach:
Water that collects contaminants as it trickles through wastes, pesticides, or fertilizers. Leaching may occur in farming areas, feedlots, and landfills, and may result in hazardous substances entering surface water, ground water, or soil.
lead:
Lead is an element that was once used as a pigment and drying agent in paint. An elevated level of lead in the body can cause serious damage to the brain, nervous system, kidneys and red blood cells. The degree of harm is related to the amount of exposure and the age at which a person is exposed. The Federal government estimates that lead is present in about 75 percent of all private homes in the United States built before 1978.
National Safety Council

lease:
An agreement, written or unwritten, transferring the right to exclusive possession and use of real estate for a definite period of time. To create a valid lease, the lessor must retain a reversionary right; that is, the lessor (landlord) must grant the right of possession to the lessee (tenant) but retain the right to retake possession after the lease term has expired. (See landlord, tenant)
leasehold estate:
A tenant's right to occupy real estate during the term of a lease; a personal property interest.
leasehold lending:
Loans on a leased property with satisfaction dates usually 10 to 20 years prior to the expiration of the lease.
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, the consummation of which is preceded by a lease, usually long-term. Typically done for tax or financing purposes.
leasing agent:
Real estate salespeople who specialize in leasing rental properties. Skilled at telephone techniques, on-site customer qualifying and closing.
legacy:
A disposition of money or personal property by will.
legal description:
A description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify it. (See government survey system, lot and block system, metes and bounds system)
legally competent parties:
People who are recognized by law as being able to contract with others; those of legal age and sound mind.
legal life estate:
A legal life estate is not created voluntarily by an owner. Rather, it is a form of life estate established by state law. It becomes effective automatically when certain events occur.
legal title:
See fee simple
legatee:
A person who receives money or personal property under a will.
lender's escrow instructions:
A lender's written instructions to the escrow company stating the conditions which must be met before the deed of trust can be recorded. (See escrow instructions)
lessee:
The person to whom property is rented or leased; called a tenant in most residential leases. (See tenant)
lessor:
The person who rents or leases property to another. In residential leasing, he or she is often referred to as a landlord. (See landlord)
leverage:
Using someone else's money to purchase a property. Refers to the ability to use the investment as collateral for a loan.
levy:
To assess, seize or 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.
liability:
1. Legal responsibility for an act. 2. A debt. (See joint and several liability, retroactive liability, strict liability)
liability coverage:
Insurance coverage for injuries or losses sustained by the public when on an individual's property.
license:
1. A privilege or right granted to a person by a state to operate as a real estate broker or salesperson. 2. The revocable permission for a temporary use of land—a personal right that cannot be sold.
lien:
A charge or claim that one person (lienor) has on the property of another (lienee) as security for a debt or obligation. (See general lien, involuntary lien, mechanic's lien, statutory lien, tax lien, voluntary lien)
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 waiver:
Documents signed by subcontractors and suppliers, indicating they have received payment in full.
life cycle costing:
In property management, comparing one type of equipment to another based on both purchase cost and operating cost over its expected useful lifetime.
life estate:
Any estate in real or personal property that is limited in duration to the life of its owner or the life of some other designated person. Although classified as a freehold estate because it is a possessory estate of indefinite duration, a life estate is not an estate of inheritance. For example, Bob Smith conveys his home to his son John and reserves a life estate for himself. Bob (the life tenant) has a life estate, and Hohn has a reversionary interest in the property. When Bob Smith dies, the fee simple property reverts to John. (See freehold estate)
life tenant:
A person in possession of a life estate.
lifting clause:
A provision in a junior mortgage that allows the underlying senior loan to be replaced or refinanced so long as the amount of the new senior loan does not exceed the amount of the first lien outstanding at the time the junior loan was made. (See junior mortgage, senior loan, subordination agreement)
like kind:
A term relating to the nature of a property rather than its quality or quantity. Only like kind properties qualify for a real estate exchange and the resulting tax benefit. (See exchange)
limited liability company (LLC):
LLCs are a relatively recent form of business organization. An LLC combines the most attractive features of limited partnerships and corporations. The members of an LLC enjoy the limited liability offered by a corporate form of ownership and the tax advantages of a partnership. In addition, the LLC offers flexible management structures without the complicated requirements of S corporations or the restrictions of limited partnerships. The structure and methods of establishing a new LLC, or of converting an existing entity to the LLC form, vary from state to state. (See corporation, partnership)
limited partnership:
Consists of one or more general partners as well as limited partners. The business is administered by the general partners and funded, for the most part, by limited or silent partners. Each limited partner can be held liable for business losses only to the extent of his or her investment. (See general partner, partnership, passive income)
Uniform Limited Partnership Act—Full Text
line of credit:
An amount of money stipulated by a commercial bank to an active customer on an annual basis. The balance normally must be brought to zero on an agreed upon regular date. (See commercial bank)
liquidated damages:
An amount predetermined and agreed by the parties to an agreement as the total amount of compensation an injured party should receive if the other party breaches a specified part of the contract. (See damages)
liquefaction:
A phenomenon which occurs during an earthquake whereby the ground/soil turns into a highly unstable, jelly-like substance.
liquidity:
>Refers to the time it takes to convert an asset to cash that is a reflection of its market value. (See market value)
lis pendens:
A recorded legal document that gives constructive notice that an action affecting a particular piece of property has been filed in a state or federal court. Lis pendens is Latin for "action pending' and is in the nature of a "quasi lien." A person who subsequently acquires an interest in that property takes it subject to any judgment that may be entered; that is, a purchaser pending a lawsuit is bound by the result of the lawsuit.
listing agreement:
A written employment agreement between a property owner and a real estate broker authorizing the broker to find a buyer or a tenant for certain real property. Listing can take the form of open listings, net listings, exclusive-agency listings, or exclusive-right-to-sell listings. The most common form is the exclusive-right-to-sell listing. (See exclusive-agency listings, exclusive-right-to-sell listing, net listings, open listings)
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.
listing presentation manual:
Used by real estate brokerages to make presentations to listing prospects. A visual aid used in combination with a verbal presentation made by a real estate agent.
littoral rights:
The rights of a landowner whose land borders a pond, lake or ocean shore-line where the body of water is non-flowing. Littoral rights extend to the mean high watermark of ocean or tidal waters. (See riparian rights, water rights)
living trust:
An arrangement in which a property owner (trustor) transfers assets to a trustee who assumes specified duties in managing the asset. After 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.
loan broker listing:
A mortgage loan broker's contract with a buyer to obtain a loan.
loan commitment:
A lender's agreement to lend a specified amount of money which must be exercised within a set time limit.
loan constant:
The annual payment required per dollar of a mortgage loan, including principal and interest.
loan correspondent:
A person or entity that acts for a lender in arranging loans or the sale of loans.
loan documents:
Documents prepared by a lender in conjunction with granting the loan to the borrower; may include a promissory note, deed of trust, and required loan disclosure documents.
loan fees:
Also called loan origination fees. Costs charged by a lender for giving out a loan; may include points, tax service fees, an appraisal fee, etc.
loan origination fee:
The processing of a mortgage application is known as loan origination. When a mortgage loan is originated, a loan origination fee, or transfer fee, is charged by most lenders to cover the expenses involved in generating the loan. These include the loan officer's salary, paperwork and the lender's other costs of doing business.
loan application:
A lender's initial sourse of information on a borrower/applicant and the collateral involved; stipulates the amount of money requested and repayment terms.
loan-to-value ratio:
The relationship between the amount of the mortgage loan and the value of the real estate being pledged as collateral.
lock-in clause:
A condition in a promissory note that prohibits prepayment of the note.
longitude:
Distance measured east or west on the earth's surface, measured by the angle which the meridian through a place makes with some standard meridian, as that of Greenwich, Great Britain or Paris, France. Longitude may be measured in time (longitude in time) or in degrees (longitude in arc). (See latitude, meridian)
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 subdivision, as specified on a recorded subdivision plat. (See legal description)
loyalty:
The duty of loyalty requires the agent to place the principal's interests above those of all others, including the agent's own self-interest. The agent must be particularly sensitive to any possible conflicts of interest. Confidentiality about the principal's personal affairs is a key element of loyalty.
low/doc or no/doc loan:
Loans that require little or no documentation regarding the borrower's income, assets or liabilities. Because of the higher perceived risk, these loans will usually require a larger down payment, higher interest rate and high credit score for borrowers. Conventional qualifying ratios do not apply.
low-e glazings:
Low-e glazings have special coatings that reduce heat transfer through windows. This type of window film is inexpensive, lasts 10-15 years, reduces interior fading, and saves energy.

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