Real Estate Definitions
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Laddering To arrange alternating or overlapping deposits into investments, such as CDs, to vary and get a better the rate of return. Land The solid ground of the earth. This can include everything under it and over it. For example, Condominium Acts do divide land horizontally thereby limiting the vertical ownership. Land Contract A legal contract or agreement for the sale of property where the buyer takes possession while making payments, but the seller holds the title until full payment is received. Land Title The legal document conveying title to a property. Land Titles System A system used for the registration of land. Under this system, the registrar or master of titles passes on the validity of the instrument and determines its legal effect with the Government's guarantee of the title. land transfer tax A provincial tax payable on any property that changes hands. First time buyers may be eligible for a rebate. Large Value Transfer System (LVTS) A system, being developed by the Canadian Payments Association, that is designed to settle large value payments, possibly $50,000 and over, at the central bank on a same-day basis. Late Charge A fee that is charged to a borrower who does make his or her payment on time. Late Payment An installment or sum of money that is paid to a lender after the due date as specified in the loan agreement. Latent Defect A deficiency or fault within a property that is not easy to see or visibly detectable, such as termite damage or traces of radon above safe levels. Lead Lender A financial institution that governs or leads a financial consortium or syndicate to provide funds for mortgages. Lease A written agreement between a property owner and a tenant. This agreement allows the tenant to use the property in exchange for rent, usually for a specified period of time. Vehicle leases are similar to leasing property because it is also a written agreement that allows the customer to use a vehicle in exchange for payments over a specified period of time. Lease Extension An option that allows a leasee to continue an existing lease. Lease extensions typically continue from month to month at the original monthly payment amount. Lease Option A written agreement between a property owner and a tenant that allows the tenant to use a property in exchange for rent, but it also gives the tenant the option to buy the property for a certain price within a specified time period. Leasehold An estate or interest in an estate in real property held by virtue of a lease for a term of years. A leasehold is considered personal property. Leasehold Mortgage A mortgage given by a lessee on the security of his leasehold interests in the land. Legal Description A written statement used to identify or describe a property that satisfies a court of law. legal fees and disbursements Charges paid on your behalf by a solicitor that are in addition to professional costs. Associated with the sale or purchase of a property, these include costs for searching, drawing and registering the mortgage documents. Legal Mortgage The written geographical description of a property as described in the land register. Lender A financial institution, such as a bank, or a mortgage company that offers and provides loans. Lending Value For mortgage purposes, this refers to the property value which is typically the lesser of the appraised value and the sale price. Lessee An individual who signs a lease. Lessor The individual or company that grants a lease to the lessee. Letter of Credit A written letter that gives authorization to a person or company to draw on a bank or which states that the bank will honour the credit up to the stated amount. Letter of Intent Written notification in the form of a letter indicating a buyer's intentions to purchase a property which is not legally enforceable. Level Payment A method of repayment where periodical payments of principal and interest are made in a certain way so the payment amount remains constant. Leverage The use of credit or borrowed funds in conjunction with a sum of money to increase the rate of return from an investment, such as buying securities on margin. Leveraged Property A property that is financed using mortgage debt. Liabilities A borrower's debts and legal obligations. Liability Insurance A policy that protects owners against claims by other parties of negligence, personal injury, or property damage. Lien A legal hold or claim of a creditor on property owned by another party. Lien Holdback When mortgagees withhold 15 percent of loan monies advanced on new construction, typically for a time period equal to the statutory period in Mechanics' Lien Acts for the registration of lien claims. Lien Waiver A legal document that is used by individuals or firms that have lien rights who wish to waive those rights. The waiver must be signed by those holding rights in order for it to be legal. Line of Credit A credit agreement, often arranged before funds are needed, in which a financial institution agrees to lend money to a client up to a maximum amount for a specific period of time. Having a line of credit provides flexibility for customers and enables them to meet short-term cash requirements. Also referred to as a bank line or credit line. Liquid Assets Assets in the form of cash or personal property that is easy to convert to cash. Real estate is an example of a liquid asset. Liquidation To settle the debts of a business or individual by selling the debtor's property, assets, and liabilities. Liquidity The capacity to convert assets to cash quickly, without suffering significant losses. Lis Pendens A legal notice or document that informs those involved in a real estate transaction that a pending court proceeding could affect the title to the designated property. Listing Inventories A list of the properties for sale in a given market. Live-work Space A structure or dwelling in which the occupant lives and works. A loft is a popular type of live-work space. Load-bearing Wall Any exterior wall or interior wall that supports its weight and the weight of other parts of the building. Loan Application A document that is filled out by those who want to borrow money. Applicants must provide detailed financial information on the application for the lender to consider before loans are granted. Loan Application Fee A cost charged by a lender for processing loan application documents that are submitted by prospective borrowers. Loan Commitment A promise made by a lender to advance a specific loan amount on specific terms. Loan Processing The steps taken by a lender to convert a loan application into an approved loan for the potential borrower. These steps include processing the application, conducting a credit investigation, evaluating the loan, etc. Loan Servicing After a loan is granted, it must be maintained by the lender to ensure the loan terms are met. Servicing a loan involves collecting payments, keeping accounting records, computing interest and principal, etc. Loan Term The amount of time, as written in the promissory note, for a borrower to repay a loan, such as a mortgage. Most conventional mortgages have a loan term of 5 or 10 years. Loan-to-Value (LTV) The ratio of the principal amount of the loan to the lesser of the purchase price of the property or the property's appraised value. This can be expressed as an 80% loan, or 80% LTV. Local Improvement Charge A fixed annual fee levied by a municipality against specific real property for a specific period which amortizes the capital costs of local improvements such as sewers, paved roads, etc. This charge is in addition to real estate taxes. Local Taxes Taxes imposed by local governments (municipalities) to pay for its services. These taxes are in addition to Federal and Provincial taxation. Lock A lender's guarantee that the quoted mortgage rate will not change for a specific period. The borrower wants the lock to stay in effect until closing. Lock-in A lender's guarantee that the quoted mortgage rate will not change for a specific period. The borrower wants the lock to stay in effect until closing. Long-term Capital Gain or Loss Profit or loss from the sale of a capital asset that is held for more than one year (12 months). See also "Short-term Capital Gain or Loss." Long-term Liabilities Money owed over a period longer than 12 months, such as mortgages, bank loans, and other obligations. Loss Payable Clause An insurance policy provision for payment of a claim to someone, other than the insured's interest in the insured property. Low-doc Loan A mortgage that requires less income or asset verification than conventional loans. Low-documentation loans are designed for the entrepreneur or self-employed, for recent immigrants, or for borrowers who cannot or choose not to reveal their financial information. A substantial down payment and excellent credit history are generally required. This type of loan will also yield a higher interest rate. Low-documentation Loan A mortgage that requires less income or asset verification than conventional loans. Low-doc loans are designed for the entrepreneur or self-employed, for recent immigrants, or for borrowers who cannot or choose not to reveal their financial information. A substantial down payment and excellent credit history are generally required. This type of loan will also yield a higher interest rate. Low-down Mortgages Loans that allow a low down payment, usually less than 10 percent. Low-down-payment Loan A mortgage where the borrower puts down a small amount and borrows a high percentage of the purchase price. Lowball Offer An offer made by a potential buyer that is well below the market bid. LPQ Amount Representing the three types inquiries made when financing mortgages (Loan / Purchase / Qualification). ‘Loan' can be for home improvements, debt consolidations or investment purposes and you must be a homeowner to take out a mortgage loan. A ‘Purchase' can be a first-time homebuyer or a purchase of a new property; you do not have to own a home when making a purchase. Qualification is simply pre-qualifying or getting pre-approved for an X amount. When applications are submitted, the ‘LPQ amount' is dependant on the type of mortgage inquiry. Typically a ‘Loan' is a fixed amount that is always lower then the value of the home. ‘Purchase' amount is the purchase price of the home/property and can be up to 100% of the value (down-payments are not factored at time of submission). ‘Qualification' is considered a target value but may come back substantially lower (or higher in some cases). The ‘LPQ amount' is an unbiased approach to represent the potential amount but rarely the actual amount. lump sum payment An extra payment made to reduce a loan. |
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