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HUD
Home Buying Glossary - L
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Laches
- The doctrine that upholds loss of the right to enforce an
agreement or restriction, because the delay in bringing action
worked to the detriment of the other party.
Land
- Real property without any improvements attached to it.
Land
Capitalization Rate - The rate of return, including
interest on land only.
Land
Contract - A contract where the seller keeps title while
the buyer has possession. Title passes when the property
has been fully paid for.
Land
Development Loan
- See Development Loan.
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
- Property that has no access because of the surrounding
property and the absence of any easement.
Land
Residual Method - A means to determine land value by
deducting the value of the income attributable to the
improvements alone from the value of the income of the
property.
Landscape
- The trees, flowers, shrubbery, lawn, etc. that surround the
exterior of a structure.
Land
Survey - An instrument that specifies precise property boundaries.
It is useful in determining if boundary violations
(encroachments) exist.
Land
Usage - The uses being made, or those allowable under
zoning ordinances.
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.
Latent
Defect - A defect not apparent from a reasonable visual
inspection.
Lateral
Support - The support a landowner has a duty to provide to
the land of adjacent property owners.
Latitude
- A unit of measure referenced by lines parallel to the
equator. Measured in terms of degrees (º), minutes ( '
), and seconds ( " ).
Law
of Decreasing Returns - The principle that states that a
property reaches a point at which additional improvements no
longer bring a corresponding increase in property income or
value.
Law
of Increasing Returns - The principle that additional
property improvements increase property income or value.
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.
It may include an option to purchase the property after a
period of time (See Lease Option).
Leaseback
- A sale arrangement where the buyer leases the property back
to the seller.
Leasehold
- A lease estate in realty; a non-freehold interest.
Lease
Option - A lease granting the tenant an option to purchase
the property after a specified period of time.
Legal
Description - A description of real property by government
survey; metes and bounds; or reference to recorded lot, block
and tract.
Lender
- A person, company or corporation that lends money for the
purchase of real estate.
Let
- To lease.
Letter
of Commitment
- A document that advises the borrower that the loan has been
approved, spells out the terms and conditions of the loan and
confirms the closing date.
Letter
of Demand - 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.
Letter
of Intent - A formal statement, usually in letter form,
from a buyer to a seller declaring that the buyer intends to
purchase a specific property for a specific price on a
specific date.
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
(interest plus amortization). Leverage has the potential to magnify losses.
Levy
- To impose or assess a tax on a person or a property; the
amount of taxes to be imposed in a given district.
License
- A revocable privilege to use the land of another.
Lien
- A legal encumbrance or claim of one person on the property of
another as security for a debt or charge.
Lienholder
- Any person or organization who holds a legal claim over the
specific property of another as security for debt.
Lien
Subordination Clause - Provides for the protection of the
lienholder's value and position from any future reversion or
forfeiture resulting in a breach of the restrictions attached
to the agreement.
Life
Estate - An estate in property for the life of a person
that may not be inherited.
Line
of Credit - An agreement by a bank or other financial
institution to extend credit up to a certain limit for a
certain time for a specific borrower.
Link
- A surveyor's measure equal to 7.92 inches.
Liquid
Assests - Assets that are readily convertible to cash.
Liquidity
- The amount an individual or entity holds in cash, checking
and savings accounts and other assets quickly convertible to
cash without any significant loss.
Lis
Pendens - A recorded notice of a pending lawsuit
concerning a property. Though not a lien, lis pendens
provides constructive notice that an action is pending against
the property.
Listing
- An agency agreement between owner and broker wherein the
owner authorizes the broker to attempt to find a buyer and to
pay an agreed commission should the broker succeed.
Littoral
Property - Property located on the shore of a lake or
ocean.
Littoral
Rights - Right of a property owner to reasonable use of a
lake, pond or ocean water bordering the property.
Livable
Floor Space - Space measured by the interior of each room,
excluding interior walls and closets.
Load
Bearing Walls - See Bearing Walls.
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 pay off the loan within its remaining life.
Loan
Closing - A meeting between borrower 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
Constant - The yearly percentage of interest, which
remains the same over the life of an amortized loan based on
the monthly payment in relation to the principal originally
loaned.
Loan
Information Sheet
- In secondary market transactions, a listing of loans being
offered for sale by principal balance, term, loan-to-value and
other items.
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
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
agreement. 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.
A fee is charged to the borrower for these services.
Loan
Submission - The process of submitting a loan to an
underwriter for review.
Loan
to Value - Mathematical computation that compares the loan amount to the
value of the property.
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.
Lockbox
- A device attached to the front door of a seller's home that
contains a key. Generally real estate agents have the
code or access keys to the lockbox in order to gain entry into
the home to show it to prospective buyers.
Lock-in
Clause - A provision that allows prepayment provided full
interest is paid as if the loan had gone to maturity; the
borrower is locked-in as to interest.
Loft
- An attic-like space below the roof of a house or barn; any
of the upper stories of a warehouse or factory.
Longitude
- Unit of measure in terms of north-south meridians.
Measured in terms of degrees (º), minutes ( ' ), and seconds
( " ).
Loss
Payable Clause - An endorsement to a hazard insurance
policy identifying additional parties (i.e. lenders) entitle
to participate in claims proceeds in the even of loss.
Lot
and Block System - A method of legal description of an
individual parcel of land by reference to tract, block and lot
numbers and other information by which the parcel is
identified in a recorded subdivision map.
Lot,
Block and Tract System - See Lot and Block
System.
Lot
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
Split - The legal division or splitting of a parcel of
land into more than one legal parcel of land.
LTV
- See Loan to Value and Loan-to-Value Ratio.
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