Welcome to the Lexicon of Real Estate Terms
Navigating the world of real estate can be daunting, especially with the myriad of terminology that pervades the industry. Our Lexicon of Real Estate Terms is here to simplify your experience, providing you with more than 3,300 terms and definitions and 33,000 Quizes to help you feel comfortable using modern real estate language.
This comprehensive guide serves as a quick reference for various audiences, whether you are a home buyer or seller, a real estate professional, a business student, an investor, or an attorney. We understand that mastery of the language is crucial in making informed decisions in the real estate market, and our lexicon is designed to empower you.
What You’ll Find in Our Lexicon:
Our lexicon includes detailed definitions for real estate topics from A to Z. Whether you’re looking to understand key concepts for personal knowledge or to enhance your professional repertoire, you’ll find terms related to:
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Appraisal: Learn about the process of determining a property’s market value.
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Architecture: Explore different styles and terminologies that define building design.
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Brokerage: Understand the role of real estate brokers and the services they provide.
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Construction: Familiarize yourself with the terms used in the building process.
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Debenture: Discover financial instruments that could impact real estate investments.
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Flood Plain: Understand the risks and regulations associated with properties in flood-prone areas.
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Negative Amortization: Get insights into loan types that increase in balance over time.
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Security Instrument: Learn about the agreements that secure a loan against a property.
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Subprime Loan: Understand the implications of loans given to borrowers with poor credit.
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Underlying Mortgage: Familiarize yourself with the financial obligations tied to a property.
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Zoning: Get to grips with laws that define how land can be used.
In addition to these definitions, our lexicon provides a wealth of resources, including:
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Common abbreviations used in real estate communications.
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Mathematical formulas essential for calculating mortgage payments, investment returns, and more.
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Charts and diagrams to visually represent complex concepts and processes.
Why Use Our Lexicon?
By utilizing this resource, you’ll gain confidence in your understanding of real estate terminology. Whether you’re conducting research, preparing for a transaction, or simply looking to expand your knowledge base, our lexicon ensures you have access to the information you need at your fingertips.
Join us in diving into the intricate world of real estate language, and empower yourself with the terminology that shapes the industry. Feel free to explore and reference frequently; your journey into mastering real estate has just begun!
Leased fee value represents the worth of a property to the landlord based on the current rental agreements in place. It's crucial for understanding property valuation under existing lease conditions.
Leased land, also referred to as leasehold land, involves leasing a parcel of land from a landowner for a specified time period, often for development or long-term residency. This arrangement grants the tenant certain property rights without transferring land ownership.
A leasehold estate refers to a tenant’s right to occupy and use real estate for a defined period as stipulated in a lease agreement. Leasehold estates provide tenants with significant rights over the property during the lease term.
Leasehold improvements refer to any changes or additions made to a rental space by a tenant that are intended to enhance or adapt the space for their particular use. These modifications are typically attached to the property, involve investment in fixtures or installations, and must comply with the terms of the lease agreement.
A leasehold mortgage is a lien placed on a tenant’s interest in real estate, usually a long-term lease, to provide security for the repayment of a loan.
Leasehold value refers to the valuation of a tenant's interest in a property, especially beneficial when the rent is below the current market rates and the lease term is significant. It plays a crucial role in investment decisions where there is a discrepancy between market rent and the agreed lease rent.
LEED Certification is a globally recognized certification system for buildings, homes, and communities that are designed and built to meet high environmental performance standards in areas such as site development, water savings, energy efficiency, materials selection, and indoor environmental quality.
Legal age refers to the official standard of maturity upon which an individual is considered legally responsible for their actions. In the context of real estate, contracts involving minors are typically voidable.
A legal description is a formally recognized and unique identifier used to describe the precise boundaries of a parcel of real estate. It is essential for legal transactions including deeds, mortgages, and other property-related documents.
A legal entity is an individual, company, or organization that has legal rights and obligations, including the ability to enter into contracts, sue and be sued, own assets, and borrow money.
The term 'legal name' refers to the name recognized by government authorities for official purposes, as recorded on documentation such as birth certificates, identification cards, and legal contracts.
A legal notice serves as a formalized notification required by law to communicate specific information to others. It ensures that all parties are informed about legal proceedings, decisions, or actions.
Legal residence, also known as domicile, refers to the place where an individual has their permanent home or principal establishment and to where, whenever they are absent, they intend to return. It plays a crucial role in determining tax responsibilities, voting rights, and other legal and financial obligations.
Legal title refers to the officially recognized ownership of property, as defined and protected by law. A person or entity with legal title has the full rights to control and transfer the property, subject to any restrictions that may apply.
A legatee is an individual or entity that receives property or assets from a will upon the death of the testator.
A lender is a party that originates or holds loans. They can include entities such as commercial banks, thrifts, credit unions, mortgage bankers, and mortgage brokers.
Lender participation refers to the scenario where multiple lenders jointly provide financing by sharing the credit risk and loan proceeds of a single transaction, commonly seen in participation mortgage structures.
Lender’s Title Insurance, also known as Mortgagee’s Title Insurance, provides protection to mortgage lenders against any issues that may arise with a property's title, such as disputes or defects.
A less than freehold estate refers to an estate in land that has a predetermined time span, most commonly associated with leases and leasehold properties.
In real estate, a lessee is an individual or entity that rents or leases property from a lessor. The lessee is responsible for adhering to the terms of the lease agreement, including payment of rent and maintenance obligations.
A lessor is a person or entity that rents out property to another party, known as the lessee, under the terms outlined in a lease agreement. Often referred to as the landlord, the lessor retains ownership of the property while allowing the lessee to use it for a specified period.
In real estate, a 'LET' refers to the act of renting out a property to a tenant. It commonly applies to residential or commercial properties that are being leased for an agreed-upon rent amount over a specified period.
A legal document indicating that a tenant recognizes a new owner of the property as their landlord, effectively transferring tenancy.
A Letter of Commitment serves as official notification to a borrower from a lender, indicating the latter's intent to grant a loan. This letter typically specifies the terms of the loan, including interest rate, loan term, and sets a date for closing.
A letter of credit is a financial instrument issued by a bank that guarantees a buyer's payment to a seller will be received on time and for the correct amount. It reduces risk in transactions, especially in real estate, by substituting the bank's credit for the customer's.
A Letter of Intent (LOI) is a formal document expressing the intention to enter into a contract or agreement without formally binding the parties involved.
A Letter of Intent (LOI) in real estate serves as a preliminary agreement that outlines the terms and details before finalizing a contract. It is commonly used during property sales, leases, and development transactions.
A level annuity is a financial product that provides a series of equal periodic payments for a specified period, typically in retirement planning or loan schedules.
A level-payment income stream refers to a series of equal payments made at regular intervals over a specific period of time. It is typically associated with annuities, mortgages, or other financial instruments.
A level-payment mortgage is a type of mortgage that requires the same payment each month (or other period) for full amortization. This means that the amount paid in monthly installments remains constant over the life of the loan.
Leverage involves the use of borrowed funds to increase an investor's purchasing power and potentially amplify the profitability of an investment. It can result in higher returns but also carries additional risk.
A 'levy' refers to the legal imposition, assessment, or collection of charges such as taxes, fines, or other financial obligations. When an authority such as a government or court mandates a collection, it is termed a levy.
In real estate, liability refers to any legal debts or financial obligations incurred during the course of business. It stands in contrast to assets, which represent ownership of resources or properties.
Liability insurance provides protection for a property owner from claims that arise due to injuries or damage to others or their property. It covers legal costs and any payouts for which the insured would be responsible if found legally liable.
The term 'liable' refers to being responsible or obligated, especially in the context of financial and legal commitments within the realm of real estate. It often indicates a party that is legally bound to uphold agreements or settlements.
A Liar Loan is a category of mortgages where borrowers are allowed to state their income and assets without providing any documentation to verify this information. These loans became notorious during the housing boom of the mid-2000s when many borrowers exaggerated their financial standing to qualify for larger loans.
LIBOR, or the London Interbank Offered Rate, is the interest rate at which major international banks lend Eurodollars to one another. It is widely used as a benchmark for adjustable-rate mortgages and other financial products.
License laws govern the activities of real estate salespersons to ensure that transactions are conducted fairly, ethically, and legally, thereby protecting consumers and maintaining integrity in the marketplace.
A licensed appraiser is a professional who holds a designation that allows them to appraise non-complex residential properties of one to four units valued up to $1 million and complex properties of one to four units up to $250,000.
A licensee in real estate refers to an individual who holds a valid real estate license, who can be either a licensed salesperson or broker.
A licensing examination is a written test administered to prospective real estate brokers or salespersons to determine their ability to represent the public in real estate transactions effectively.
A lien is a legal claim or right against a property that is used as security for the payment of a debt, judgment, mortgage, or taxes. It serves as an encumbrance and imposes restrictions on transferring the property until the debt is satisfied.
A lien waiver is a document from a contractor, subcontractor, materials supplier, or other party to the construction project, stating they have received payment and waive any future lien rights to the property for the amount received.
States whose laws give a lien on property to secure debt. This is contrasted with title-theory states where the lender holds the title. In lien-theory states, borrowers have the right to use and enjoy the property unless they default, at which point lenders may foreclose.
A lienholder is an individual or entity that holds a lien on a property, thus having a legal right or claim against the property as a security for a debt or obligation.
A Life Estate is a type of freehold interest in real property that lasts for the lifetime of an individual. Upon their death, the property either reverts to the original owner or passes to a remainderman.
A Life of Loan Cap is a contractual limitation on the maximum interest rate that can be applied to an adjustable-rate mortgage during the term of the loan.
A life tenant is an individual who holds the right to use, occupy, and control a property for the duration of their own life or the lifetime of another specified individual.
A life-support system in real estate encompasses all critical infrastructure and systems in a building aimed at ensuring safety, security and sustenance. These include camera surveillance, fire protection, communications systems, backup lighting, and more, crucial for both tenant safety and property utility.
Assets considered to be of the same nature and character, even if they differ in quality or grade, which can be exchanged under Internal Revenue Code Section 1031 to defer capital gains taxes.
Limited liability refers to the restriction of an individual's potential losses to the amount they have invested in a particular asset or business. This concept limits their personal liability and prevents them from losing more than their initial investment, provided they do not otherwise agree to assume additional liability.
A Limited Liability Company (LLC) is an organizational form recognized in many states, offering limited liability protection to its owners and potential tax advantages of a partnership, making it an attractive option for real estate ownership.
A limited partnership (LP) is a business structure where at least one partner is passive, with liability limited to their investment, and at least one partner with unlimited liability.
A plan offered by some real estate brokers that allows buyers or sellers to contract for less than the full array of brokerage services at reduced commission rates.
The Lincoln Institute of Land Policy is a nonprofit educational organization committed to the research and discussion of land policy and property tax issues on a global scale.
A line of credit (LOC) is an arrangement between a financial institution and a borrower that establishes a maximum loan balance that the lender permits the borrower to access or maintain. The borrower can draw funds, repay, and redraw, provided the borrowing does not exceed the agreed credit limit.
The lineal foot is a unit of measurement used in real estate to represent a one-foot length measured in a straight line along the ground. Commonly used in pricing land and determining costs for building materials, the concept assumes consistent depth or width.
A LINK is a unit of distance commonly used by surveyors, where 100 links form a surveyor’s chain. One link is equivalent to 7.92 inches or 0.66 foot.
The term 'linkage' in real estate refers to the physical or economic connection, often pertaining to the time and distance between a land use and support facilities, or between people and their activities. Successful linkage leads to enhanced property value and better quality of life for residents.
A liquid asset is a property that can be converted to cash quickly and with minimal loss of value. Liquid assets provide the ability to raise cash for financial needs such as down payments for real estate.
Liquidation involves the process of closing a business, selling its assets, and distributing the proceeds to creditors and shareholders. It can also refer to retiring debts by paying them off.
Liquidated damages are a predetermined sum agreed upon in a contract which one party will pay to the other in the event of a breach of contract. This provision aims to cover the non-breaching party's estimated losses without requiring a legal battle.
Liquidation Price refers to the amount a property would fetch under an immediate sale, typically lower than its market value due to the urgency of the transaction and expenses involved. It contrasts with Market Value, which reflects a sale in normal market conditions.
Liquidity refers to the ease with which an asset can be quickly converted into cash without significantly affecting its market price. This concept is crucial in financial and real estate contexts, as it influences the ability to sell assets promptly and efficiently.
Lis Pendens, meaning 'suit pending' in Latin, is a recorded notice indicating that a lawsuit has been filed which may affect the title to a certain piece of land. This notice serves to inform other interested parties that the property is subject to litigation.
A Listing refers to the agreement between a real estate agent and a property owner that authorizes the agent to act as the owner's representative in the sale of the property.
A listing in real estate refers to a written agreement between a property owner and a real estate agent authorizing the agent to represent the owner in marketing and selling the property. A listing can also refer to the property itself being marketed for sale in the agent's portfolio.
A listing agreement, also known as a listing contract, is a legally binding contract between a property owner and a real estate broker or agent that details the terms and conditions under which the broker will market, promote, and sell the property.
A Listing Broker (Agent) is a licensed real estate professional who secures a listing of the property on behalf of the property owner for the purpose of marketing and selling the property. The Listing Broker is responsible for representing the seller in negotiation and facilitating the sale.
The listing price, also known as the asking price, is the price a seller sets for a property when placing it on the market. It's an initial amount intended to serve as a starting point for negotiations with potential buyers.
Litigation refers to the process of taking legal action, typically involving disputes brought to court, to enforce or defend a legal right.
The term 'Littoral' pertains to properties situated adjacent to a large body of water, such as an ocean, sea, or lake. This term is differentiated from 'Riparian,' which refers to properties adjoining a river, stream, or other flowing body of water.
A load-bearing wall is an essential structural component of a building that supports the weight from the roof, floor, and above stories, transferring weight to the foundation.
A loan is an arrangement in which one party borrows money from another party, often through formal agreements that detail the terms of repayment.
A loan application is a necessary document required by a lender before issuing a loan commitment. It includes key details such as the borrower's personal information, loan amount and terms, property description, and financial and employment data.
A loan application fee is a non-refundable charge required by a loan originator to cover the credit report, property appraisal, and other incidental expenses associated with underwriting a loan.
A decision by a lender to extend credit in a specified amount, often accompanied by a loan commitment outlining the terms and conditions. Also referred to as Loan Preapproval when provided before formal loan application.
Loan closing, often simply referred to as closing, is the final step in the mortgage process where the borrower and lender finalize various agreements and settle necessary payments to transfer ownership of a property.
A Loan Commitment is an agreement by a lender to provide a borrower with a specified amount of funding under specific terms at a future date. This commitment often includes a locked-in interest rate, providing certainty to the borrower.
The Loan Constant, also known as the Mortgage Constant, is used to analyze the burden of debt repayment on a property and measure its ability to generate earnings sufficient to cover mortgage payments.
A loan contract is a document that acknowledges the debt of the borrower and establishes the terms by which that debt is to be discharged. It outlines the payment schedule, prepayment conditions, and what constitutes a default. In cases of mortgage loans, it also includes pledges of real property as collateral.
A Loan Correspondent, also known as a Mortgage Correspondent, serves as an intermediary between borrowers and lenders, primarily offering mortgage products from various financial institutions to clients.
The Loan Coverage Ratio (LCR), also known as the Debt Coverage Ratio (DCR), is a key financial metric used to assess a property's ability to generate enough income to cover its debt obligations. It is widely used by lenders to evaluate the financial health and viability of real estate investments.
A Loan Discount is a type of fee that some lenders charge at the origination of a loan to lower the interest rate charged during subsequent payments. It’s commonly known as discount points.
Loan fraud involves intentionally providing false information on a loan application to qualify for a loan or secure better terms. This illegal act can lead to civil liability and criminal penalties.
A loan lock, or locked-in interest rate, is an agreement between a mortgage lender and a borrower that secures a specified interest rate on a mortgage for a predetermined period, usually ranging from 30 to 60 days.
Loan modification refers to changes made to the original terms of an existing loan agreement between the lender and borrower, usually to prevent foreclosure and provide financial relief to the borrower.
A loan officer assists borrowers throughout the loan application process, coordinating between the borrower and financial institutions to ensure the information provided supports the approval of the loan application.
Loan Origination is the comprehensive process of creating a new loan, which spans from the initial marketing efforts to the actual closing of the loan agreement. This critical phase in lending encompasses several steps to ensure that both the borrower and lender align with the terms.
A loan origination fee is a service charge collected by lenders for processing new loan applications. This fee can cover various administration tasks such as application processing, underwriting, and funding the loan.
A Loan Package is a comprehensive collection of documents that are associated with a specific loan application. This package includes all necessary information required by the lender to evaluate and process the loan request.
Loan points, also known as discount points, are fees paid directly to the lender at closing in exchange for a reduced interest rate. This is also referred to as 'buying down the rate.'
Loan proceeds refer to the net amount of money disbursed by a lender to a borrower after all the lender’s fees and other charges have been deducted. It is the actual amount received by the borrower for the intended purpose, such as purchasing real estate.
Loan processing encompasses the various steps taken by a lender to approve a loan, from the initial application to the closing of the loan. It involves verifying the borrower's information and fulfilling necessary requirements to ensure the legality and financial viability of the loan.
The loan-to-value (LTV) ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. Typically expressed as a percentage, LTV ratios are used to assess the risk involved in a mortgage or loan agreement.
A loan servicer is a company responsible for collecting and managing loan payments, managing escrow accounts, and handling other administrative aspects of a loan portfolio.
Loan servicing encompasses the administrative aspects of a loan from the moment the proceeds are disbursed to the borrower until the loan is paid in full. This includes the collection of principal, interest, and escrow payments, as well as handling defaults and foreclosures, if necessary.
Loan terms refer to the major requirements and conditions of a loan agreement, including aspects such as interest rates, repayment schedule, fees, and other obligations set by the lender and agreed upon by the borrower.
The Loan-to-Value (LTV) ratio is a critical financial metric in real estate and lending that compares the loan amount to the appraised value of the property, influencing mortgage terms, interest rates, and approval processes.
The Loan-To-Value (LTV) Ratio is a financial term and calculation that lenders use to express the ratio of a loan to the value of an asset purchased. It plays a crucial role in the assessment of risk associated with lending, especially in real estate.
