Real Estate Definitions
Land contract: See Contract for deed.
Late charge: The penalty a borrower pays when a payment is made after the due date.
Lease: A written agreement between the property owner and a tenant that stipulates rent to be paid, as well as the terms under which the tenant may reside in the real estate for a designated period of time.
Leasehold estate: The tenant's right to title to a property for a specific period of time whereby the tenant does not actually own the property but has a long-term lease on it.
Lease option: A lease that gives the tenant the right to purchase the property, either during the lease term or at its end.
Lender's Title Insurance: An insurance policy covering a lender for the loan amount, whereby the coverage declines in amount as the loan is paid off, to the point where there coverage ends when the loan is paid completely.
Lessee: The individual or party who takes property upon a lease.
Lessor: The individual or party who grants property upon a lease.
Liabilities: An individual's financial obligations.
Lien: A legal claim or charge allowed to a creditor against a debtor's property that must be paid when the property is sold to transfer title.
Life estate: The right to use, occupy and own, for the duration of the life of the individual.
Lifetime payment cap, or Lifetime rate cap: The limit on the amount that payments can increase or decrease over the term of an adjustable-rate mortgage (ARM).
Liquid asset: Cash, or an asset that can be readily converted into cash.
Liquidated damages: The compensation predetermined by both parties to a contract to be paid to the injured party, should the other party breach the contract.
Lis pendens: A legal document filed in either a federal or state court indicating that a suit is pending against property located in the county where the notice is recorded.
Listing agreement: A contract by which a broker is employed by the seller to find a buyer for the seller's real estate, according to the seller's terms, and for which service, the broker is paid a commission.
Listing broker: A broker whose office initiates the property listing (as opposed to the cooperating broker, whose office negotiates the sale); the listing broker and the cooperating broker may be the same person.
Loan origination: The process by which a lender sets up a mortgage loan secured by real property.
Loan origination fee: The fee charged by the lender to the borrower for setting up a mortgage loan, usually computed as a percentage of the total mortgage amount.
Loan-to-value (LTV) percentage: The proportion of the amount of the mortgage loan against the appraised value or sales price of the piece of property being pledged as collateral; e.g., a home with appraised value of $100,000 but with a $90,000 mortgage has a LTC of 90 percent.
Lock-in: A guaranteed interest rate established at the time of closing which is honored if the mortgage closes within a certain period of time, also usually establishing the number of points to be paid at closing as well.
Lock-in period: The time period during which the set interest rate is guaranteed to the borrower.
Loss Payable Clause: A provision in an insurance policy that provides payment for any loss to two or more parties, as their interest so justifies, the two parties typically being the owner and the lender.
Lot: A parcel of land with fixed boundaries as determined by a survey.