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Real Estate Dictionary/Glossary A,
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N.B. This glossary is provided with the understanding that the author is not
providing any legal, or other professional services. If legal or real estate
advice is required, the services of a competent professional person should be
sought.
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.
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.
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.
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.
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.
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.
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)
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 source 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 (
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.
Real Estate Dictionary/Glossary A,
B,
C,
D,
E,
F,
G,
H,
I,
J,
K,
L,
M,
N,
O,
P,
Q,
R,
S,
T,
U,
V,
W,
X,
Y,
Z
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