Real Estate Glossary

This list is provided for reference only. Each state has it's own real estate laws, terms and regulations for Realtors. In Arizona, your Realtor and Title Company handle most real estate transaction activities that involve attorneys in many other states. However, you have the right to seek the advice of an attorney or other professional counsel in any real estate transaction.

Laches - Delay or negligence in asserting one's rights.

Land Contract - See Agreement of Sale - and Contract For Deed - . CAUTION: Be absolutely sure which type of sale this term is referring to.

Late Charge - A penalty for failure to pay an installment on time.

Latent DefectHidden structural defects and flaws.

Lease - A contract between a landlord and a tenant conveying the use and/or occupation of the landlord's 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.

Lender - A general term encompassing all mortgages, and beneficiaries under deeds of trust.

Legal Description - A description of a specific parcel of real estate which is acceptable to the courts in that state, and which will allows an independent surveyor to locate and identify it. Usually it uses one of the following methods; government survey - , metes and bounds - , or recorded plat - (lot and block number).

Lender - A company, institution or person that loans money to with the intention of a full repayment of the debt. Most commonly, this debt is repaid with interest - .

Less Favorable Treatment - Any time a person is treated differently on the basis of race, sex, religion, color, familial status, disability, or national origin, either by action or inaction, in the selling or leasing of real property, it is a violation of the Fair Housing Laws - . Also known as unequal treatment or different treatment.

Lessee - Tenant leasing property.

Lessor - One who leases property to a tenant.

Letter of Intent - A formal method of stating that a prospective developer, buyer or lessee, is interested in property.

Leverage - The use of borrowed funds to finance an investment and to magnify the rate of return.

Liber - A Latin word for book.

Licensee - A person licensed by the State Real Estate Commission to engage in real estate brokerage, either as a broker or as a salesman.

Lien - An encumbrance against property for money, either voluntary or involuntary.

Lien Theory State - States where here legal title of mortgaged property resides with the mortgagor (borrower), with the mortgage as a lien against the property. Also see Title Theory State - .

Life Estate - An interest in real property for the life of a living person. The interest then reverts back to the grantor or on to a third party. Comment: This is useful for investors who want to purchase a property they believe will be more valuable in the future. The seller retains the right to live in or occupy the property until their death. The buyer pays less than the current market value for the property since they will not get possession of the property or collect any rent until the seller dies.

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, contributing capital and liable only to the amount contributed.

Loan Package - The complete package of information given to the lender regarding the borrower and the property which the lender uses to evaluate the financial state of the borrower and the property.

Loan-to-Value Ratio - (Loan Ratio) The ratio of the mortgage loan amount to the properties appraised value (or the selling price whichever is less). If you purchase a property for $100,000 and make a $20,000 down payment the loan to value ratio will be 80%.

Loyalty - One of the most fundamental fiduciary duties an agent owes to the principal. The duty obligates a real estate broker to act at all times, solely in the best interests of the principal, excluding all other interests, including that of the broker.

An example of breach of loyalty is when a broker purchases a property listed with his/her firm, and immediately resells it at a profit. Such conduct is usually considered appropriate and lawful by persons who act at arms length, but a fiduciary would be considered to have stolen an opportunity for profit that rightfully belongs to the principal.

Lis Pendens - A legal notice recorded to show pending litigation relating to real property and giving notice that anyone acquiring an interest in said property subsequent to the date of the notice may be bound by the outcome of the litigation.

Listing Agreement - The legal agreement between the listing agent/broker and the vendor, setting out the services to be rendered, describing the property for sale, and stating the terms of payment.

Lock or Lock In - A commitment you obtain from a lender assuring you a particular interest rate or feature or a definite time period. Provides protection should interest rates rise between the time you apply for a loan, acquire loan approval, and, subsequently, close the loan and receive the funds you have borrowed.