Real Estate Glossary: L

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.

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.

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..

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.

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.

Loan-to-Value Ratio
The ratio of the loan amount to the lending value of a property expressed as a percentage. For example,
the loan-to-value ratio of a loan for $90,000 on a home which costs $100,000 is 90%.

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 (usually less than 20%) 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.

Lump Sum Prepayment
An extra payment, made in lump sum, to reduce the principal balance of your mortgage, with or without penalty. A closed mortgage typically restricts the amount and frequency of the prepayments you can make. With an open mortgage, however, you can make a lump sum prepayment at any time without penalty. Making prepayments can help you pay off your mortgage sooner and ultimately save on interest costs over the life of your mortgage.