A GLOSSARY OF REAL ESTATE TERMS

L


Land
In a legal sense, the solid part of the surface of the earth, as distinguished from water; any ground, soil or earth whatsoever regarded as the subject of ownership and everything annexed to it, whether by nature, e.g., trees and everything in or on it, such as minerals and running water, or annexed to it by man; e.g., buildings, fences, etc. In an economic sense, land consists of all those elements in the wealth of a nation which is supposed to.
Land Area
The total land area included with the property; expressed in acres. One acre equals 43,560 square feet.
Land Contract
Installment plan for buying a house. It is used as an alternative to obtaining a loan from a traditional, source such as a mortgage banker or savings and loan.
Late Charge
A penalty for failure to pay an installment on time.
Latent Defect
Hidden structural defect.
Laundry Rooms
Identifies the number of laundry facilities located on the property.
Laundry/Vending Income
Income from laundry and/or vending operations on the property.
Lease with Option to Purchase
A lease under which the lessee has the right to purchase the property. The option may run for the length of the lease or only for a portion of the lease period.
Lease Assignment
An agreement between the commercial property owner and the lender that assigns lease payments directly to the lender. Otherwise, lease payments would be to the owner who would then forward mortgage payments to the lender. In a CMBS, lease payments would go directly to the servicer. A form of credit enhancement.
Lease Expire
Identifies the date on which the lease ends or expires, excluding any lease options or other conditions that allow an escape from the lease encumbrance.
Lease Options
Identifies whether any lease renewal options are included in the lease agreement. A renewal option allows the tenant to extend the lease for one or more prescribed periods of time and are frequently in short- and long-term leases. Renewal options are binding on the lessor, but allow the tenant to reach a decision in light of circumstances prevailing at the time of the renewal. Thus, they are generally considered favorable to the tenant, not the lessor.
Lease Start
The date on which the lease encumbrance begins; may be the date of physical occupancy as indicated in the lease.
Leased Area
Identifies the total net leased area of the tenant; the total area encumbered by the lease agreement as indicated in a lease or lease abstract; expressed as square feet.
Leasehold Improvements
The cost of improvements for a leased property,. often paid by the tenant.
Leasing Commission
A fee paid by the property owner or the tenant to a real estate broker or leasing agent for services rendered; typically paid by a property owner for attracting and securing a new tenant. Usually calculated as a percentage (1% to 6%) of the entire lease payments, paid in increments during the lease term.
Legal Description
An expanded and unique description of a property that is used on legal documents, such as deeds and deeds of trust. Recorded documents generally require a legal description.
Lender
A general term encompassing all mortgages, and beneficiaries under deeds of trust.
Industry standard guidelines for pre screening of expenses.
Lender’s Instructions
A document that lenders prepare for the closing agent that outlines the requirements for loan closing.
Lender Name
The company name of the Lender.
Lender Overrides
Manual positive and/or negative overrides made to the income and/or expenses by the lender/underwriter; used to normalize or adjust a particular income or expense line item.
Lessee
One who possesses the right to use or occupy a property under lease agreement.
Lessor
One who holds title to and conveys the right to use and occupy a property under lease agreement.
Letter of Intent
A formal method of stating that a prospective developer, buyer or lessee is interested in property.
Letter of Interest (LOI)
A LOI report populated with loan information used by loan originators to provide a preliminary loan quote or expression of interest to a borrower; also referred to as an "Expression of Interest."
Lien
An encumbrance against property for the payment of debt; a lien may be a mechanic’s lien, mortgage, unpaid taxes or judgment.
Life Estate
An estate in real property for the life of a living person. The estate then reverts back to the grantor or to a third party.
Light Industrial
An Industrial property subtype in which the property is occupied by one or more tenants and the property is utilized for light industrial purposes (e.g. warehouse, light assembly, public utility plants, wholesale, motor vehicle assembly or repair, heavy equipment garages, distribution centers, mini-warehouses for storage, etc.).
Limited or General Partnership
A borrowing entity structured as a partnership in which there is at least one partner who is passive and limits liability to the amount invested, and at least one partner whose liability extends beyond monetary investment.
LLC
Limited Liability Company; a borrowing entity structured as a company wherein the restriction of one’s potential losses to the amount invested. The absence of personal liability. Provided to stockholders in a corporation and limited partners of a limited partnership.
Limited Partnership
A partnership consisting of one or more general partners who conduct the business and are responsible for losses, and one or more special partners, who contributes capital and are liable only to the amount contributed.
Lis Pen Dens
A public notice that litigation is pending on a property.
Listing
A record of property for sale by a broker who has been authorized by the owner to sell. Also used to denote the property so listed.
Listing Agreement
Agreement between a property owner and a real estate broker, authorizing the broker to find a buyer for the property. If the sale is consummated, the listing broker will be paid a fee.
Loading Docks
A platform or platforms at which trucks or trains load or unload cargo.
Loan Amortization
Indicates the requested Loan Amortization (in years); the period of time over which principal and interest payments are scheduled. For example, a loan with a 10-year term and a 25-year amortization will have a balloon payment at the end of 10 years.
Identifies the loan amount that is being quoted or requested.
Loan Assumption
The act of taking over the previous borrower’s obligation of a mortgage note. Assumptions may be advantageous if the terms of the mortgage are advantageous and they are not changed by the lender when the mortgage is assumed.
Loan Lock
Guarantee from a lender that a borrower will receive the interest rate in effect at the time of loan application.
Loan Maturity Date
If the Loan Purpose is Refinance, identifies the date on which the existing mortgage note expires or is called.
Loan Name
Identifies the loan name that is shown on the Main Loan List; an easily recognizable or descriptive name; typically a street address or property name (e.g. "100 Main Street" or "Commerce Center Mall").
Loan Officer
A person that helps borrowers through the loan selection, processing, and closing of a mortgage loan. Loan officers can be paid a commission or salary for their services and can work for mortgage brokers, mortgage bankers, or depository institutions.
Loan Origination Fees
The cost to obtain a loan that is paid to the originating lender or broker.
Loan Package
The information regarding a borrower and property necessary which is the basis for a lender’s credit decision to extend or deny credit.
Loan Purpose
The purpose of the loan request.
Loan Servicing
The function of collecting loan payments, managing the property tax and insurance escrows, foreclosing on defaulted loans and remitting payments to the investor/beneficiary.
Loan Term
Indicates the requested Loan Term (in years). The period of time over which the loan is repaid (e.g. a loan with a 10-year term and a 25-year amortization will have a balloon payment at the end of 10 years).
Loan Type
Identifies the requested loan type; options include Fixed or Variable.
The ratio between the principal amount of the mortgage balance, at origination or thereafter, to the current value of the underlying real estate collateral; referred to as LTV. The ratio is commonly expressed to a potential borrower as the percentage of value a lending institution is willing to finance. The ratio is dynamic and varies by lending institution, property type, geographic location, property size, among other things.
Lock-Box Provision
The trustee is given control over the gross revenues of the underlying properties in a CMBS. Property owners only have claim to cash flows net of expenses. Expenses include debt service, taxes, insurance and other operating expenses.
Loss to Lease
The difference between the market rental rate for a property and the rent being paid for a similar property. It is an indicator of the changing market conditions. For example, if a property was leased for a one-year term at $1,000 per month and currently the market is getting $1,100 per month on similar properties, the loss to lease is $100 per month. Also called Free To Lease Difference.
Low Traffic
A count of the number of vehicles moving past a location during a period of time; usually expressed as "Average Daily Traffic" (ADT) and characterized as High, Medium or Low.
Low-Rise Garden Apartments
A Multifamily subtype; a one-, two- or three-story apartment building or development with 5 or more apartments characterized by a garden-like setting and its location in a town or unincorporated developed area in a close proximity to a city. Suburbs, largely residential, are often dependent on the city for employment and support services; generally characterized by low-density development relative to the city; usually one to three story structures in a suburban or rural-urban fringe development.