Real Estate Terms - L


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The surface of the earth; any part of the surface of the earth.

land contract

A real estate installment selling arrangement whereby the buyer may use, occupy, and enjoy land, but no deed is given by the seller (so no title Passes) until all or a specified part of the sale price has been paid. Same as contract for deed and installment land contract


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

A lease that contains the right to purchase the property for a specific price within a certain time frame.

leasehold estate

A way of holding title to a property wherein the mortgagor does not actually own the property but rather has a recorded long-term lease on it.

legal description

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


A bank, savings institution or mortgage company that offers home loans.


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.


The London Interbank Offered Rate Index (LIBOR) is an average of the interest rates that major international banks charge each other to borrow U.S. dollars in the London money market. Like the U.S. treasury the CD indexes, LIBOR tends to move and adjust quite rapidly to changes in interest rates.

life 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.

life estate

An estate in land where the owner's rights to the property cease at their death.

like-kind property

A term used in a 1031 exchange of property held for productive use in a trade or business or for investment. Unless cash is received, the tax consequences of the exchange are postponed pursuant to Section 1031 of the Internal Revenue Code.

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.

lis pendens

A legal notice intending to bind third parties of litigation claiming an interest in real estate.

listing agreement

An agreement between the owner of a property and a real estate broker giving the broker authorization to attempt to sell or lease the property at a certain price and terms in return for a commission, set fee or other form of compensation.

littoral rights

The right of an owner of land with a shoreline contiguous to a sea or lake to use and enjoy the shore without a change in its position created by artificial interference; as distinguished from riparian rights and water rights.


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

loan officer

Also called lender, loan representative, loan "rep," account executive, and others. The loan officer is the representative of the lending institution.

loan origination

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

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)

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.


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.

lot and block system

The Lot and Block Survey System is a method used in the United States to locate and identify land, particularly for lots in densely populated metropolitan areas and suburban areas. It is sometimes referred to as the Recorded Plat Survey System or the Recorded Map Survey System.


A building with fewer than four stories above ground level.