Late Charge: A fee a lender imposes on a borrower when the borrower does not make a payment on time.
Lease Agreement: The formal legal document entered into between a landlord and a tenant to reflect the terms of the negotiations between them.
Leasehold Interest: The right to hold or use property for a fixed period of time at a given price, without transfer of ownership.
Legal Description: A geographical description identifying a parcel by government survey, metes and bounds, or lot numbers of a recorded plat including a description of any portion that is subject to an easement or reservation.
Legal Owner: The legal owner has title to the property, although the title may actually carry no rights to the property other than as a lien.
Letter of Intent: A preliminary agreement stating the proposed terms for a final contract. See also LOI.
Leverage: The use of credit to finance a portion of the costs of purchasing or developing a real estate investment. Positive leverage occurs when the interest rate is lower than the capitalization rate or projected internal rate of return. Negative leverage occurs when the current return on equity is diminished by the employment of debt.
LIBOR (London InterBank Offered Rate): The interest rate offered on Eurodollar deposits traded between banks, also called swaps.
Lien: A claim or encumbrance against property used to secure a debt, a charge or the performance of some act.
Lien Waiver: Waiver of a mechanic’s lien rights that is often required before the general contractor can receive a draw under the payment provisions of a construction contract. It may also be required before the owner can receive a draw on a construction loan.
Like-Kind Property: Term used in an 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.
Limited Partnership: Type of partnership comprised of one or more general partners who manage the business and are personally liable for partnership debts, and one or more limited partners who contribute capital and share in profits but who take no part in running the business and incur no liability above the amount contributed.
a) Exclusive right-to-sell agreement, the seller pays a fee regardless of who produces the buyer. This fee covers many important services that the sales associate performs above and beyond finding a qualified buyer.
b) If the seller finds a buyer, he or she is not obligated to pay the fee in exclusive-agency listing. If the sales associate finds a buyer, then the fee is paid to the real estate company.
c) Open listing is one in which you sign with several real estate firms and give each authority to sell your home. It is typically less effective than exclusive listing because the sales associate lacks the incentive to make and all-out effort to sell your home.
Listing Contract: A contract with the broker or firm you hire to represent you in the sale of your home, according to the terms of the sale that you specify. In exchange for producing a ready, willing and able buyer for you, the sales associate is paid a commission.
Loan Application Fee: A lender’s fee that you must pay when applying for a mortgage.
Loan Origination Fee: A fee, usually one to four points, charged by the lender for processing your mortgage.
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.
Loan-to-Value Ratio (LTV): The ratio of the value of the loan principal divided by the property’s appraised value
Loan Commitment: A promise by a lender or other financial institution to make or insure a loan for a specified amount and on specific terms.
Lock-in: When interest rates are volatile, borrowers want to “lock in” an interest rate and many lenders will oblige, setting a limit on the amount of time the lock-in is in effect.
Lot: Generally one of several contiguous parcels of land making up a fractional part or subdivision of a block, the boundaries of which are shown on recorded maps and plats.