Real Estate Glossary

Land - Generally, the ground and the natural things and rights attached to it. See also, raw land.

Land Sales Contract - Financing instrument for the purchase of any real estate where an owner personally extends credit to a buyer, or "vendee," who agrees to pay the owner in installments. The buyer takes possession of the property immediately, but the seller, or "vendor," retains title to the property. The buyer does not receive a deed until the contract has been fully paid. Often referred to simply as a "contract." May also be referred to as a "conditional sales contract," an "installment sales contract," or a "contract for deed."

Late Charge - Penalty a borrower must pay when a payment is received by the lender a stated number of days after the due date.

Laundry Room - Room, usually fully finished, with connections for a washer and dryer, but not for other utilities. See also, utility room.

Lawyer - See attorney.

Lease - Written agreement between a property owner (the "lessor") and a renter (the "lessee") that stipulates the conditions under which the renter may possess the real estate for a specified period of time and rent. The lessee also is called a "tenant."

Lease-Option - A lease that also grants to the lessee, or tenant, the right to purchase the property being leased within a specified time and at a specified price and terms. More commonly used by real estate investors or by owners faced with difficult market conditions. See also, option.

Lease-Option Agreement - Written contract for the lease of a property with an option, exercisable at the lessee's discretion, to purchase the property within a specified time frame; must be accompanied by the payment of nonrefundable "option money," which may or may not be applied to the purchase price, depending on agreement of the parties.

Lease-Purchase Agreement - Written contract for the lease of a property executed along with an agreement to purchase the property for a specified sum on a specified date; accompanied by an earnest money deposit, usually substantial, that is forfeited if the lease-purchaser fails to complete the purchase.

Lease Purchase Plus Mortgage - Freddie Mac loan program designed to assist low-income home buyers or those with prior credit difficulties to purchase a single-family home; allows a buyer to enter into a 38-month lease, which converts to a mortgage at the end of the lease period. Rent payments made during the lease period are applied toward the home's down payment if the renter completes the purchase. Not currently available in Oregon.

Leaseback - See sale and leaseback.

Leasehold Estate - Possessory interest in real estate of limited duration and without actual ownership: a lease. Considered personal property, may be called "chattel real."

Legal Description - Written identification of a parcel of land following a prescribed method that is sufficient to geographically locate the property without oral testimony.

Lender's Title Policy - Insurance policy providing financial protection for a lender's interest in the title to property used to secure, or collateralize, a loan made by the lender; normally paid for by the purchaser of the property and provides more extensive coverage than the standard owner's title policy. See also, owner's title policy.

Liability - (1) Obligation of a person or business, as a financial obligation or a legal obligation. (2) Something that works to one's disadvantage.

Liability Insurance - Insurance coverage offering protection against claims alleging that a property owner's negligence or inappropriate action resulted in bodily injury or property damage to another party.

LIBOR - London Inter-Bank Offered Rate, an index to which adjustable rate loans is sometimes linked. See also, index.

Lien - Legal claim against a property for money that must be paid off when the property is sold. Types of liens include: judgment liens, mechanic's liens, mortgage liens, tax liens, etc. Special laws apply to the priority of each type of lien, as well as to how each type of lien can be enforced, or "perfected."

Lifetime Payment Cap - Limit on the total monthly payment that can be collected on an adjustable rate mortgage. (If the allowed interest rate goes higher than the payment cap allows, negative amortization of the loan will occur.)

Lifetime Rate Cap - Limit on the total amount that the interest rate can increase over the life of an adjustable rate loan.

Line of Credit - Amount of money a borrower may obtain, up to a specified amount, from a lending institution (usually a credit card company, bank or credit union) without having to have a new credit check or submit a new credit application. See also, home equity line of credit.

Link - Unit of measurement in surveying, especially used in the 19th and early 20th centuries, equal to 7.92 inches, commonly found in legal descriptions on deeds. 100 links comprise a chain, which is equal to 66 feet.

Liquid Asset - Cash or an asset easily converted to cash.

Lis Pendens - Legal notice recorded to provide a public record of pending court action with regard to specific real property. Anyone acquiring the property after the date of the notice may be bound by the outcome of any related litigation. See also, notice of action.

Loan - Something borrowed with an agreement to return or repay, generally with interest.

Loan Application - Form used to apply for a loan and to record information concerning the prospective borrower and proposed collateral; used to evaluate whether or not to make a loan and, if so, at what amount and what interest rate. Form typically requires such information as bank balances and account numbers, bank branch addresses, location and type of employment, amount of income, outstanding debts, monthly housing expense, etc. (required information may vary by lender).

Loan Commitment - Lender's promise to make or insure a home loan to a specific borrower for a specified amount and under specified terms. See also, commitment letter, conditional commitment, and firm commitment.

Loan Limit - Maximum amount set by a mortgage institution, such as FHA, VA, Fannie Mae or Freddie Mac, for loans made under the institution's residential loan programs. Loan limits usually change annually, and are based on an estimated average or median price for homes generally. A loan in an amount above the Fannie Mae or Freddie Mac loan limits is referred to as a "jumbo loan."

Loan Origination - Process by which a lender or mortgage broker brings into existence a real estate loan.

Loan Origination Fee - Amount charged by a lender or mortgage broker to provide compensation and profit for the professional services rendered in originating a real estate loan; usually expressed as "points," with one point being equal to 1 percent of the loan amount. See also, processing fee.

Loan Servicing - Collection and bookkeeping of loan payments; may done by a lender or by another party for the lender.

Loan-to-Value Ratio (LTV) - Relationship between the amount of a mortgage and the value of the property financed. Value is usually determined by the agreedupon purchase price or the appraised value, whichever is lower. A $225,000 loan for a home valued at $250,000 produces a 90-percent LTV.

Lock - Written agreement in which a mortgage broker or lender guarantees a specified interest rate if a mortgage is funded within a set period of time. Some agreements may specify a certain number of points to be paid for the lock. Sometimes referred to as a "lock-in."

Lock-In Period - Time during which a lender has guaranteed to offer a given interest rate to a borrower; usually offered in increments of 30, 45 or 60 days.

Lot - Generally, any portion or parcel of real property. Often used to refer to each specific piece of land in a subdivision, but also commonly used to refer to a parcel of land of any size, regardless of its use or location.

LTV - See loan to value ratio.