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Real Estate Glossary L [Part 3]
Lineal
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In familial ties, it refers to direct-line descendants, such as children or grandchildren, as opposed to “collaterals” (nephews, cousins, etc.); it also refers to living descendants (blood or adoptive), regardless of distance from the deceased.
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In terms of measurements, it refers to a line measurement. A square with four feet on each side has a lineal measurement of sixteen feet. Linear measure is also known as linear scale.
Lineal foot
Lumber that is 1 inch thick by 12 inches wide by 12 inches long is referred to as a pound.
Linkages
Relationships that need the transportation of goods or persons from one area to another.
The attractions or critical access requirements that one land use has for another land use.
Time, money, and effort spent travelling to and from a location in order to deliver or pick up goods or people.
Linked sites
Sites connected by connections; that is, sites connected by the need to transport products or persons from one place to another.
Lintel
A horizontal board that supports the weight over an opening like a door or window.
Structural support for a door or window that extends horizontally.
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Liquidated damages
The entire amount of compensation that an aggrieved party should get if the other party breaks a defined section of the contract as determined by the parties to an agreement. In construction contracts, the parties frequently foresee the potential of a breach (for example, a delay in completion by a specified date) and stipulate the amount of damages to be paid in the case of the violation.
To be enforceable, the liquidated losses clause must include an amount that bears a reasonable relationship to the actual damages estimated by the parties; otherwise, the amount is treated as a penalty for failing to comply. If a defaulting buyer put earnest money in excess of 20% of the purchase price and failed to consummate the contract, the courts would very certainly allow the buyer to recover some of the deposit money on the grounds that the seller would be unfairly rewarded if he kept it all.
Penalty clauses are viewed negatively by courts and are frequently declared void and unenforceable. As a result, the clause should clarify for what damage the party is being reimbursed (loss of rent, attorney fees, and the like). A liquidated damage clause in an installment contract or contract for deed will generally not be enforced by a court if the clause tends to result in the forfeiture of all installment payments made.
A seller who chooses to keep deposited earnest money as liquidated damages may be barred from pursuing other remedies, including extra money damages. For example, if a buyer puts $1,000 in earnest money on a $75,000 house and then fails, the seller who retains the $1,000 as liquidated damages and then sells the house for only $70,000 cannot later recoup the difference in the two purchase prices from the original buyer.
Some contract of sale forms include a unique box for the parties to initial if they want to treat the earnest money as liquidated damages. Some states have statutory guidelines regarding what constitutes a reasonable amount for liquidated damages; for example, in California, if the amount exceeds 3% of the sale price, the seller bears the burden of proving that such excess is reasonable; otherwise, it is treated as a penalty and returned to the buyer.
In the case of a contract violation, one party will compensate the other for an agreed-upon amount.
A monetary reward established in a contract to be granted to the harmed party in the case of either party’s violation.
The agreed-upon amount to be paid as compensation for a violation of contract is known as liquidated damages.
Liquidation value
The most money a property is likely to make in a foreclosure sale (foreclosure or tax sale). Used when there is a short window of opportunity for a sale or if there are stringent terms attached to the transaction.
Liquidity
A metric for how easy and frequently assets may be exchanged. It is determined by the amount of time it takes to complete a certain action as well as the capacity to exchange the asset at market pricing.
The ability to turn an asset into cash without suffering a loss.
The capacity to rapidly sell an item for fair market value.
Assets that can be turned into cash quickly.
The ability to sell an asset for a price near to its true value and convert it into cash. Publicly traded equities (as opposed to stocks in tiny or closely held firms) are a reasonably liquid investment. Real estate has generally been thought of as a longer-term investment that is not very liquid.
A ratio that assesses a person’s immediate debt-paying ability is one test of a person’s (or company’s) liquidity. It analyses cash on hand and everything that can be converted into cash quickly, known as fast assets. Quick Assets: Current Liabilities is the quick ratio. A quick ratio of one to one is often appropriate for a business.
Cash-convertibility is the ability of assets to be quickly converted into cash.
Rapid and complete liquidation of an investment with no loss of principal.
Liquidity Risk
The danger that only a small number of purchasers will be interested in purchasing an asset if and when the existing owner decides to sell it, and hence the risk that an asset owner will be unable to sell it.
The danger that an owner will be unable to rapidly sell an item for its fair market worth.
Lis pendens
Suit pending (Latin).
A recorded legal document that serves as constructive notice in a state or federal court that an action touching a specific piece of property has been filed. Lis pendens is Latin for “waiting action,” and it is similar to a “quasi lien.” A person who later acquires an interest in that property does so pursuant to any judgment that may be entered; in other words, a purchaser pendente lite (waiting a litigation) is bound by the outcome of the action. The reasoning behind lis pendens is that several lawsuits can be avoided if all parties who may get involved with the property are first made aware that it is the subject of a litigation.
A lis pendens notice is not the same as putting a lien on or attaching real property. It is just a notice of a pending action affecting real property title or ownership. The action must affect real estate title or the right to possession. As a result, it could not be utilized to recover legal costs or real estate commissions in a lawsuit. A lien, on the other hand, is a charge or security interest on the property, but an attachment is a method of preserving the property for collection purposes. However, the end result of filing a lis pendens is the same: the property cannot be freely transferred or encumbered, and title is effectively rendered unmarketable throughout the litigation.
The names of the parties, the subject of the case, and a description of the affected property must all be included in the notice of pending action. Before issuing a lis pendens, several states need a court hearing. The purchaser or encumbrancer of the affected property is regarded to have constructive notice of the pendency against the specified parties from and after the time of recording the notice. Before filing a lis pendens, check with an attorney; an incorrectly filed lis pendens may result in a lawsuit by the property owner for defamation of title or malicious prosecution. A lis pendens of this type could be expunged from the record by filing a “motion to purge.”
One or more lawsuits are pending.
List
In order to obtain a list.
Listed Real Estate Investments
Property investments that are exchanged on stock exchanges and valued according to supply and demand for company shares.
Listing
The act of putting a property up for sale on the open market.
A legal agreement between a property owner and a real estate broker permitting the broker to find a buyer or tenant for a specific piece of real estate. Open listings, exclusive-agency listings, and exclusive-right-to-sell listings are all types of listings. The exclusive right to sell listings is preferred by the majority of brokers.
Although not expressly unlawful, net listings are unenforceable under many state statutes of frauds and are thus not generally recommended.
To avoid receiving listings signed by unauthorized individuals, a broker should carefully examine the genuine ownership of the property at the time of listing. It is critical that all registered owners sign the listing agreement. In addition, the broker has a legal and ethical obligation to inspect the listed property to ensure that all information provided in the listing agreement is correct and comprehensive. Owners should not be depended on to affirm the veracity of technical or complex things about which they are unaware, such as the legal impact of some recorded restrictions on the property.
Listings are personal service contracts that cannot be transferred to another broker. This does not preclude the broker from transferring the responsibility of finding buyers for the property to the sales office.
If discussions to sell the property are ongoing at the time the listing expires, the time limit under the listing agreement is extended by implication.
The advertisement normally mentions how much commission the seller will pay the broker if certain conditions are met. If a listed property is sold involuntarily, such as through foreclosure, condemnation, or tax sale, the broker is usually not entitled to a commission.
In a buyer’s listing, the buyer hires a broker to find a property.
At the time of signing, the broker must provide a copy of the listing agreement to all parties signing it. The broker should not show the buyer the listing contract (even MLS listings) because the listing is a confidential employment contract between the seller and broker.
A contract that allows an agent to sell a property on behalf of the owner.
Broker-speak for “for sale” or “for rent” in the context of an apartment.
The listing of properties for sale.
Listing broker
The seller’s or landlord’s agent in the sale or renting of the latter’s real estate holdings.
Listing contract
A contract between a real estate owner and a real estate broker that obligates the broker to sell the property under specified conditions and terms. It requires the property owner to pay a commission to the broker if the broker is successful in locating a ready, willing, and able buyer for the property on the conditions provided or terms acceptable to the seller.
Listor
A real estate broker or salesperson who secures a listing for a specific property. In most brokerage firms, the listor earns a portion of the total commission if the property is sold - even more if the listor is also responsible for the sale (the “selling broker”). Lister is sometimes written lister.
Lithosphere
The solid component of the earth or other spatial body, as opposed to the atmosphere and hydrosphere.
Littoral land
Land that borders a sea or ocean and is consequently impacted by tide currents. Littoral land differs from riparian land, which is located on the bank of a river or stream.
Livability space ratio
The minimal square footage of non vehicular outdoor area in a development that is supplied for each square foot of total floor area for site planning considerations.
Live load
A weight that moves or changes and can be safely added to the weight of a building.
For example, a modern high-rise office building may be able to hold 60 pounds per square foot of office furniture and equipment.
Livery of seisin
An ancient method of conveying title to real estate. Conveyance was achieved in the Middle Ages by a legal process known as an enfeoffment, with livery of seisin essentially a handing over of the fee with delivery of the seisin (possession of a freehold estate). The transfer was frequently represented by the simple ceremony of transferring a handful of dirt, a piece of grass, or a twig from a tree on the land in front of a witness.
Living trust
A trust arrangement in which a property owner (trustor) transfers assets to a trustee who is responsible for administering the asset. The revenue generated by the trust property is distributed to or utilized for the benefit of the specified beneficiary after operational expenses and trustee’s fees are paid.
Load
The amount of weight sustained by a structural component, such as a load-bearing wall.
Load bearing wall
All walls on the outside and all walls on the inside aligned with a beam or girder.
Load factor
Another term for the ratio of rentable to useable office space in a building. To calculate rentable area, multiply the factor by the tenant’s useable space.
The fraction of a property’s space that can be rented out. A user can use the load factor as a yardstick to compare the value of various locations that charge similar fees. It’s also called “the icing on the cake.” Formula: Area available for rent multiplied by the load factor Footage that can be put to good use
Loading dock
The space used for shipping or receiving merchandise and moving merchandise between the warehouse area and trucks or rail cars, either within an industrial building and close to its loading doors or outside the structure.
Loan
A loan of money for a specific period of time.
The sum of money that will be lent.
Loan application
A documented application that includes all of the information a lender requires before providing a loan commitment.
Loan balance
A loan’s outstanding principle balance. If the loan is interest-only, it will always be equal to the initial sum. If the debt is self-amortizing, it decreases over time.
The sum of money still owed on an amortizing loan at a specified point in time.
Loan balance table
A table that shows the remaining balance on an amortized loan; sometimes known as a remaining balance table.
Loan broker
Individual who, for a charge, places loans with main lenders.
Loan commitment
A lender’s obligation to provide particular amounts at a later period. Terms might be stated, or they can be the terms in effect on the date funds are advanced.
A written agreement in which the lender agrees to making a loan to the borrower if the borrower meets the commitment’s terms and conditions.
A written promise by a lender to lend a given amount of money to a qualifying borrower on a specific piece of real estate for a certain period of time under certain conditions. It could be a conditional or qualified commitment or a strong commitment. It is more formal than a pre-approval loan. The lender usually decides whether to make a commitment to lend the required amounts after analyzing the borrower’s loan application. This application includes the borrower’s name and residence, place of employment, salary, bank accounts, credit references, and other information.
A mortgage loan agreement is a written contract created by a lender that outlines the terms and conditions of the loan.
A commitment in writing from a lender to provide a borrower with a mortgage.
Loan constant
The yearly debt service on a loan multiplied by the loan’s initial amount.
The monthly mortgage payments that amortize a loan are calculated using a factor or multiplier.
Loan correspondent
A loan negotiator for traditional lending institutions or other lenders. The correspondent frequently continues to service the loan on behalf of the lender and acts as the collector.
Loan or mortgage value
Lender-Recognized Value – The portion of the property’s value that is used to secure a loan.
Loan origination fee
Lender-required financing fee.
A fee imposed by a lender at the moment a loan promise is made or funds are advanced.
Loan point
Borrower-paid origination fees are incurred when a loan is initiated. Every point added to a loan represents one percentage point.
Loan pool
A collection of loans held in trust as security for the issuance of mortgage-backed securities. The loans could represent a subset of mortgage loans, such as all new homes, or a geographically diverse group of loans. The cash flows generated by the allocated loans are passed through to the holders of the securities either directly or sequentially, depending on the principal and interest generated. Loan pools fund more than half of residential mortgage loans and are having little success supporting commercial loans and other types of debt (such as credit cards and car loans).
Loan pooler
A corporation that assembles huge blocks of loans for the purpose of holding them in trust as collateral for the issuing of a series of mortgage-backed securities. Loan poolers are often huge financial institutions with the resources to put together multimillion-dollar loan blocks. Despite the fact that loan poolers may issue creditworthiness, the majority of poolers seek credit enhancement from one of the big federal underwriters.
Loan proceeds
The loan’s face amount less sums deducted by the lender for factors such as loan origination costs or discount points.
Loan servicing
All acts and activities involved with the administration of a mortgage loan, such as payment collection, monitoring insurance and tax responsibilities, and notifying delinquent borrowers. This role is frequently performed by a separate entity from the company that owns the mortgage.
Loan submission
A group of important papers and documents about a specific property or properties that are given to a lender to look over and think about in order to get a mortgage loan. Most of the time, the following papers and documents are included: letter of transmittal; appraisal; financial statements; credit reports and/or Dun & Bradstreet reports; application; sales or purchase agreements on existing properties; leases, if applicable; photographs; plat plan and survey; cost breakdown, if applicable; set of plans and specifications on proposed construction; and zoning ordinances, utilities map, strip maps, aerial photographs, and any other relevant information that would help the lender decide on a particular property.
Loan to cost ratio
A way to compare the amount of money borrowed to fund a project with the total cost of building it, as used in commercial real estate construction
Loan underwriting
The lender evaluates the riskiness of the expected mortgage payments. A determination of the potential borrower’s desire and ability to make scheduled mortgage payments is required.
The procedure through which a potential borrower files a formal loan application, and the lender evaluates all pertinent information before deciding whether or not to commit to the loan.
Loan-To-Value (LTV) Ratio
The amount owed on a mortgage as a percentage of the property’s estimated value.
The difference between the value of the property funded by the loan and the price paid by the borrower to buy the property, which gives the borrower a measure of equity in the asset that guarantees the loan. The higher the LTV ratio, the less equity the borrower has at risk and the less protection the lender has under the security agreement.
The link between the amount of a mortgage loan and the value of the real estate on which it is secured; the loan amount divided by market value.
The proportion of a mortgage loan principal to the appraised value or sales price of a property, whichever is lower. Loan-to-value ratios are determined by individual lender policies as well as federal banking rules. Lenders believe that the larger a borrower’s equity in a property, the less likely the borrower is to default and lose the property through foreclosure. When private mortgage insurance is applied, the lender can sometimes offer loan-to-value ratios of 90 to 95 percent (typically limited to owner/occupants). Investors may qualify for up to 80% financing, FHA ratios are set by statute, and a veteran with a VA loan may borrow up to the purchase price or 100% LTV.
The proportion relationship of debt money to overall project value.
This is the ratio of the amount of the loan to the value of the house or land. For example, if you borrowed $160,000 and your home is worth $200,000, the LVR would be 80%.
The proportion of a property’s appraised worth that a lender will lend to a borrower.
The ratio of a property’s total loan amount to its fair market value. The ratio of the loan to the value of the property.
Loanable funds
Money held by financial intermediaries in excess of statutory reserves; accessible to borrowers.
Lobby
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A place where people can wait or meet in hotels, motels, apartment buildings, office buildings, or other buildings with similar layouts.
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To work for or against the passage of a bill or resolution before a legislative body.
Local economic activities
In a city, activities that benefit local companies and residents.
Local improvement district
A separate legal entity that is set up by the people who live in a certain area according to state law. The district is run by a board of directors, and in many ways, it is like a city, especially when it comes to taxes. Most of the time, the district issues its own bonds to pay for improvements like water distribution systems, drainage structures, irrigation works, and a whole lot more. To pay back the money they borrowed by selling bonds, these districts have the power to assess all the land in the district based on its value.
Location
A reference to a site’s comparative advantages in terms of ease, transportation, and social benefits, among other things.
Location analysis
Procedure for determining whether or not a potential site meets the technical and functional criteria set forth for the location.
Location quotient
The proportion of employees in a certain type of work or job classification in a community to the proportion of employees in the same type of work or job classification nationally. If the ratio surpasses one, the activity is classified as a basic economic activity.
Market analysis method used to compare local workforce estimates with national averages, determined by dividing the percentages of the workforce engaged in each major industry group locally by the percentages of the workforce employed in those industry groups nationwide.
The ratio of a local activity’s prevalence to its prevalence on a larger geographic scale, like the country, is one way to define this index.
Using simple employment projections derived from projected location quotients, this technique can be used to estimate a community’s economic base multiplier (under various simplifying assumptions).
Locational advantages
Advantages gained by an occupant purely as a result of a site’s locational appeal.
Locational benefits
The advantages received from the utilization of real estate that are appropriately attributed to the site location’s appeal.
Locational obsolescence
Loss of value caused by a bad external effect (e.g., a commercial use abutting a residential property).
Lock-in clause
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A provision in a promissory note that forbids the note from being prepaid.
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A contract provision stating that the buyer and seller have the right to notify the lender in order to fix the amount of points as of the date of the notice.
Lock-Out Period
The period following the loan’s origination during which the borrower is unable to prepay the debt.
Lockbox
A customized secured container placed on the door of a listed property to help the broker exhibit that property. The house keys are kept in a lockbox that can be unlocked with a code or a magnetic stripe card.
Liability for property damage, theft, or personal harm could occur from a lack of ordinary care in installing the lockbox or issuing the combination or unique key. A particular lockbox liability endorsement is now available on some mistakes and omissions insurance plans.
LockIn/Rate lock agreement
Guaranteed interest rates on a mortgage loan provided that it is closed within a specified time frame; this is an agreement between the lender and the applicant.
Lockout provision
A mortgage clause or provision that prohibits prepayment of the mortgage for a set length of time following its origination.
Locus sigilli
In some formal legal documents, the abbreviated form, L.S., is used at the end of the signature line instead of the actual seal.
Loft
Unfinished building space; also refers to open space, generally on the first or second level and used for a low-cost industrial business. The renter pays a cheaper rent for loft space than for finished space, and the cost of finishing the area is amortized over the lease time. Typically, banks, savings and loan institutions, and retail establishments rent on a loft-space basis.
An area that was formerly used for business purposes but has since been converted to residential use. There are wide windows, high ceilings and an abundance of natural light in this room.
London Interbank Offered Rate (LIBOR)
The interest rate at which big multinational banks in London lend to one another. LIBOR rates are available for a variety of deposit maturities.
Long run
The length of time required for market forces to operate in order to establish equilibrium is an economic phrase.
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Long-term capital gains
In tax accounting, this term refers to profits earned on the sale of assets held for longer than six months.
The gain on a capital asset kept for a specific amount of time for income tax purposes.
Longitudinal studies
The study of relationships between variables and the measurement of changes in the variables across time. They include taking repeated measurements of the same phenomenon to track any changes over time. Also known as time series research.
Lookout
A roof overhang is supported by a cantilever or a short wood bracket.
Loop
A looped route with two entrance points from the same road.
Loss factor
A commercial leasing word, sometimes known as the load factor or partial floor factor, that expresses as a percentage the square-footage discrepancy between the rentable and usable area. For example, a floor in an office building with a rentable space of 10,000 square feet and an useable area of 9,000 square feet has a loss factor of 10% because toilets, hallways, and elevator shafts consume 1,000 square feet.
The loss factor is a simple metric that a tenant can use to compare different rental properties that may have comparable rentals but vastly different loss factors.
Loss payee
The person on an insurance policy who will get paid if the property that is insured gets damaged or destroyed. Most of the time, a secured lender will ask a borrower to insure the property that is used as security and name the lender as the loss payee.
Lost-grant doctrine
An uncommon real property law rule relates to a claim of title to real property against the sovereign. Its application to realty has been acknowledged in the United States primarily in claims relating to lands allegedly held under now-lost grants from the Spanish Crown prior to the extension of American sovereignty over such territories. The lost-grant doctrine, like adverse possession, requires that the possession be actual, open, and exclusive. However, a higher level of proof is required for a claim against the sovereign (for example, a chain of conveyance and payment of taxes). The claimant is only required to demonstrate the legal potential of a lost award, not its actual presence.
Lot
A parcel, tract, or area of land defined by a plat or other legal means.
Lot and block
A means of identifying a piece of property.
Lot Frontage
The area of a lot that is near to a roadway.
Lot split
The split of land into separate portions by separating ownership or otherwise dividing it. Local ordinances often govern lot dividing. Also known as land division.
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