Land Contract – See Contract for Deed.

Land Lease - See Ground Lease.

Land Trust - A revocable living trust that is generally used to hold title to real estate for the purposes of privacy and anonymity. Also known as an Illinois Land Trust or Nominee Trust. The land trustee is a nominal title holder. Beneficiaries have the exclusive right to control and direct the trustee’s actions.

Landlocked - A lot with no access to public thoroughfare except through an adjacent lot is said to be landlocked.

Late Charge - The penalty a borrower must pay when a payment is made within a stated number of days (usually 15) after the due date.

Lease – A written agreement between the property owner and a tenant that stipulates the conditions under which the tenant may possess the real estate for a specified period of time and rent.

Lease Option – An alternative financing option that allows home buyers to lease a home with an option to buy. Each month’s rent payment may consist of not only the rent, but an additional amount which can be applied toward the down payment on an already specified price.

Lease Purchase - a lease combined with a purchase agreement. Under this agreement, the lessee is obligated to purchase the leased property under certain conditions.

Lease Purchase Mortgage Loan – An alternative financing option that allows low- and moderate-income home buyers to lease a home from a nonprofit organization with an option to buy. Each month’s rent payment consists of principal, interest, taxes and insurance (PITI) payments on the first mortgage plus an extra amount that is earmarked for deposit to a savings account in which money for a downpayment will accumulate.

Leasehold - the interest or estate on that a lessee’s lease is applied to.

Leasehold Estate - A method of holding title to a property. In this method, the mortgagor does not own the property, but instead has a recorded long-term lease on it.

Legal Blemish – Any detrimental blemishes on a piece of property, for example, a fraudulent title claim or zoning violation.

Legal Description – A property description, recognized by law, that is sufficient to locate and identify the property without oral testimony.

Lender – A term which can refer to the institution making the loan or to the individual representing the firm. For example, loan officers are often referred to as “lenders.”

Lessee – Under a lease, a person to whom property is rented.

Lessor – A person who rents property to another person under the terms of a lease.

Let – The act of renting a property to a tenant (lessee).

Letter of Intent – A written letter from one party to another that expresses the desire to enter into a contract without actually doing so.

Liabilities -A person’s financial obligations. Liabilities include long-term and short-term debt, as well as any other amounts that are owed to others.

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

Lien – A legal claim against a property that must be paid off when the property is sold.

Lien Theory State – A state in which the legal title of a mortgaged property belongs to the mortgagor (borrower), with the mortgage as a lien against the property. Example: Texas. See Title Theory State for contrast.

Life Cap – For an adjustable-rate mortgage (ARM), a limit on the amount that the enterest rate can increase or decrease over the life of the mortgage.

Life Estate – An interest in a property that is terminated upon the death of a certain person.

Life Tenant – A person who is allowed to use property for life or, in some cases, the lifetime of another designated party.

Lifetime Cap – The highest amount that an adjustable mortgage can be raised over the initial interest rate. These caps usually fall within the range of 5.0% – 7.0%. For example, if the initial interest rate is 5.25% and the lifetime cap is 6.0%, the highest interest rate a borrower might be required to pay during the life of the loan would be 11.25% (5.25% + 6.0%).

Lifetime Payment Cap – For an adjustable-rate mortgage (ARM), a limit on the amount that payments can increase or decrease over the life of the mortgage. See cap.

Lifetime Rate Cap – For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the life of the loan. See cap.

Like-Kind Property – Property that shares the same nature.

Limited Partnership – A partnership in which at least one partner is passive and whose liability is limited to the amount invested. There also must be at least one partner whose liability extends beyond just monetary investment.

Line of Credit – An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time to a specified borrower. See home equity line of credit.

Liquid Asset – A cash asset or an asset that is easily converted into cash.

Liquidated Damages – An agreed amount stated in a contract that one party will pay another in the event of a breach of contract.

Liquidity – The ease of changing assets into cash.

Lis Pendens – A Latin term meaning “suit pending.” The recorded notice of a lawsuit’s filing. The outcome of the lawsuit may affect title to a real property.

Listing – A written agreement between a principal and an agent that authorizes the agent to perform services for the principal that involve the principal’s property.

Loan – A sum of borrowed money (principal) that is generally repaid with interest.

Loan Application (1003) – A loan application necessary for conforming loans. This application is now considered the standard application for most residential loans, even non-conforming loans.

Loan Commitment – See commitment letter.

Loan Officer – Also referred to by a variety of other terms, such as lender, loan representative, loan “rep,” account executive, and others. The loan officer serves several functions and has various responsibilities: they solicit loans, they are the representative of the lending institution, and they represent the borrower to the lending institution.

Loan Origination – The process by which a mortgage lender brings into existence a mortgage secured by real property.

Loan Origination Fee – In most cases, a lender will charge a borrower an origination fee, or “points,” to process a loan. A point is equal to one percent of the total loan amount.

Loan Package – An organized group of documents containing all of the necessary information to obtain an underwriting decision of loan approval or loan denial. A package may contain some or all of the following documents, depending on the type of loan and lender: loan application, statement of use of funds, statement of net worth, P & L statements, pay stubs, tax returns, statements from various types of banking and investment accounts, letters of explanation, property appraisal, verification of employment, credit report, verification of housing payments, purchase agreement, etc. (See definition of “underwriting” below.)

Loan Servicing – After you obtain a loan, the company you make the payments to is “servicing” your loan. They process payments, send statements, manage the escrow/impound account, provide collection efforts on delinquent loans, ensure that insurance and property taxes are made on the property, handle pay-offs and assumptions, and provide a variety of other services.

Loan-To-Value (LTV) Percentage – The relationship between the principal balance of the mortgage and the appraised value (or sales price if it is lower) of the property. For example, a $100,000 home with an $80,000 mortgage has a LTV percentage of 80 percent.

Lock-In – A written agreement in which the lender guarantees a specified interest rate if a mortgage goes to closing within a set period of time. The lock-in also usually specifies the number of points to be paid at closing.

Lock-In Period – The time period during which the lender has guaranteed an interest rate to a borrower. See lock-in.

Lot and Block – A means of identifying a property’s legal description. See Legal Description.

Lot Line – a line that bounds a lot. The line is described in a property survey.

Low-Documentation Loan – A mortgage requiring only a very small amount of verification of assets and income.

Low-Down-Payment loan – A home loan requring the borrower to make a small down payment before he or she obtains the necessary financing for purchase of a house.