An equitable doctrine used by courts to bar a legal claim or prevent the assertion of a right because of undue delay or failure to assert the claim or right.


The earth's surface, extending downward to the center of the earth and upward infinitely into space, including things permanently attached by nature, such as trees and water.

land banking

The activity of purchasing land that is not presently needed for use.

land contract

A real estate "installment" selling arrangement whereby the buyer may use, occupy, and enjoy land, but no "deed" is given by the seller (so no "title" passes) until a specified part of the sale price has been paid. Same as "contract for deed" and "installment land contract." Example: Collins buys a recreational lot. under the "land contract" she signed, she must pay $500 down and $100 per month for 7 years; then she is to receive a "general warranty deed."

land lease

Only the ground is covered by the lease. See "ground lease." Example: Abel arranges a "land lease" from Baker for 50 years at a net annual rent of $5,000. Abel builds a shopping center on the land at the end of 50 years, the entire property will revert to Baker.

land residual technique

In "appraisal," a method of estimating the value of land when given the "net operating income" (NOI) and value of "improvements." Used for "feasibility" analysis and "highest and best use." See "income approach." Example: A property generates $10,000 net operating income ($15,000 rent less $5,000 operating expenses). The improvements cost $70,000 to construct and claim a 12% rate of return (10% interest plus 2% depreciation), which is $8,400. The remaining $1,600 income is capitalized at a 10% rate (divided by .10) to result in a $16,000 land value using the "land residual technique."

land sale-leaseback

The sale of land and simultaneous leasing of it by the seller, who becomes the "tenant." Example: Collins owns land and wants to raise cash to build a shopping center on it. She sells the land for $100,000 to Baker and leases it back for 50 years at a $5,000 annual rent. Collins can use the land for the lease "term" provided she pays the annual rent, so she builds the shopping center after the "land sale-leaseback."

land trusts

A few states permit the creation of land trusts, in which real estate is the only asset. As in all trusts, the title to the property is conveyed to a trustee, and the beneficial interest belongs to the beneficiary. In the case of land trusts, however, the beneficiary is usually also the trustor. While the beneficial interest is personal property, the beneficiary retains management and control of the real property and has the right of possession and the right to any income or proceeds from its sale. One of the distinguishing characteristics of a land trust is that the public records usually do not name the beneficiary. A land trust may be used for secrecy when assembling separate parcels. There are other benefits as well. A beneficial interest can be transferred by assignment, making the formalities of a deed unnecessary. The beneficial interest in property can be pledged as security for a loan without having a mortgage recorded. Because the beneficiary's interest is personal, it passes at the beneficiary's death under the laws of the state in which the beneficiary lived. If the deceased owned property in several states, additional probate costs and inheritance taxes can be avoided.

land use intensity

A measure of the extent to which a land parcel is developed in conformity with "zoning" ordinance. Example: Under a local zoning ordinance, "developers might be allowed a maximum "land use intensity" of 4,000 square feet of "improvements" per "acre" of land.

land use planning

An activity, generally conducted by a local government, that provides public and private land use recommendations consistent with community policies. Generally used to guide decisions on "zoning." [Example: As part of its "land use planning" efforts, the city planning department prepared maps of existing land uses, forecasts of future development, a list of planned new roads, "utility" extensions and waste disposal facilities, a map of environmentally sensitive areas, and a map showing recommended future land uses.]

land use regulation

Government "ordinances," codes, and permit requirements intended to make the private use of land and natural resources conform to policy standards. See also "zoning." Examples: Local governments have several types of "land use regulation." Commonly used types are: building codes, curb-cut permit systems, historic preservation laws, housing codes, subdivision regulations, tree-cutting laws, and zoning.

land use succession

A change in the predominant use of a "neighborhood" or area over time. See also "neighborhood life cycle." Example: As the neighborhood aged, it began to make a transition from large "single-family housing" to "apartment buildings" through the process of "land use succession."

land, tenements, and hereditaments

A phrase used in early English law to express all sorts of real estate. Example: The "bundle of rights" in real estate is expressed by the phrase "land, tenements and hereditaments. It includes all "interests" in real estate.

land/building ratio

A ratio of relative values of the land to "improvements." Contrast with "improvement ratio." Examples: (a) a "shopping center" has a "land-to-building ratio" of 40% ($4 million land to $10 million building.) (b) An office building has a "land-to-building ratio" of 10% ($1 million land to $10 million building.)


A landfill is an enormous hole, either excavated for the purpose of waste disposal or left over from a surface mining operation. The hole is lined with clay or a synthetic lining to prevent leakage of waste into the surrounding water supply. Waste is laid on the liner at the bottom of the landfill and a layer of topsoil is then compacted into the waste. The layering is repeated again and again until the landfill reaches its full capacity.


The condition of a lot that has no access to a public thoroughfare except through an "adjacent" lot. See "egress." Compare with "easement", "right-of-way."


A property owner who rents or leases to another.

landlord representation

The term for when an agent (who, in this instance, is often referred to as the "landlord rep agent") represents only the landlord in a lease transaction, and has a fiduciary obligation to their client as well as certain obligations for disclosure to the other parties in the transaction.

latent defect

A hidden structural defect that would not be discovered by ordinary inspection and that threatens the property's soundness or the safety of its inhabitants. Some states impose on sellers and licensees a duty to inspect for and disclose latent defects. Buyers have been able to either rescind the sales contract or receive damages when a seller fails to reveal known latent defects. The courts have also decided in favor of the buyer when the seller neglected to reveal violations of zoning or building codes.

latent value

The value possessed by a property which has potential for redevelopment because it is currently not employed at its highest and best use.

lateral support

The right to have land supported by the adjoining land or soil beneath. (See subjacent support)


Distance on the earth's surface, measured northward or southward from the equator measured in degrees of the meridian; angular distance reckoned on a meridian. (See longitude, meridian)

law of agency

A fiduciary relationship is created under the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed real estate broker to be his or her agent. (See agent, fiduciary)

layout efficiency

Efficiency of the usable area to meet tenant’s requirements. Efficiency of usable area is dictated by such factors as: building shape, core location, column size location, floor size, leasing depth, corridors, etc.


Lead is an element that was once used as a pigment and drying agent in paint. An elevated level of lead in the body can cause serious damage to the brain, nervous system, kidneys and red blood cells. The degree of harm is related to the amount of exposure and the age at which a person is exposed. The Federal government estimates that lead is present in about 75 percent of all private homes in the United States built before 1978.

lead-based paint

A hazardous material sometimes found in U.S. buildings constructed before 1978.

leasable area

The space actually occupied by retail tenants, and the basis for charging base rent. Sometimes also used for industrial space. Also called "gross leasable area."


The right to occupy space in real property in return for consideration (money) paid to the property owner (landlord or lessor) by a tenant (lessee) pursuant to a contract typically called a lease agreement; also the act of exercising this right.

lease assignment

See assignment of lease.

lease assumption

A new landlord’s commitment to pay the cost of a company’s lease to its prior landlord to facilitate their moving into his project.

lease buy-out

A cash payment from a new landlord to a tenant’s previous landlord to cancel the remaining balance of an existing lease term.

lease expiration exposure schedule

A tabulation listing the total leasable square footage of all current leases that expire in each of the next five years, without regard to renewal options.

lease-listing flyer

A basic description of commercial space for lease, usually on one or two pages, that a listing agent circulates to prospective tenants as well as other commercial leasing agents, in order to attract interest in the space.

lease option

A lease under which the tenant has the right to purchase the property either during the lease term or at its end.

lease over

The act of the landlord accidentally leasing space so that the new lease's terms infringe on the option rights of an existing lessee.

lease premium

An up-front payment made by a tenant to a landlord, often to offset costs incurred by the landlord. Lease premiums may sometimes be found in ground leases.

lease purchase

The purchase of real property, the consummation of which is preceded by a lease, usually long-term. Typically done for tax or financing purposes.

lease with option to purchase

A lease that gives the "lessee" (tenant) the right to purchase the property at an agreed-upon price, under certain conditions. Example: Abel "leases" property with an "option to purchase." He must pay $500 per month rent for 5 years; after that, he may buy the property (but is not forced to buy) for $100,000.

leased area

The leasable area or units of a property where the rights to exclusive use and possession have been conveyed from the owner to another party by a written document.


The property interest held by a lessee by virtue of the lease agreement.

leasehold estate

A tenant's right to occupy real estate during the term of a lease; a personal property interest.

leasehold improvements

Fixtures attached to real estate that are generally acquired or installed by the "tenant." Upon expiration of the "lease," the tenant can generally remove them, provided such action does not damage the property or conflict with the lease. Examples: Cabinets, light fixtures, and window treatments of a retail store in a leased building are "leasehold improvements."

leasehold lending

Loans on a leased property with satisfaction dates usually 10 to 20 years prior to the expiration of the lease.

leasehold mortgage

A "lien" on the tenant's "interest" in "real estate." Example: Abel is leasing land from Baker under a 50-year lease. Abel builds a shopping center and borrows money from the Big Money Assurance company to do so. Big Money Assurance Company secures the loan with a "leasehold mortgage." The mortgage will be lower in priority (subordinate) to the land lease because the lease was contracted first. Had the mortgage been arranged before the lease, the mortgage would have priority. The holder of a prior "lien" has first claim to the income and assets if in default.

leasehold value

The value of a tenant's interest in a "lease," especially when the "rent" is below market and the lease has a long remaining "term." Example: When land rent for an acre of Manhattan was $10,000 per year, a knowledgeable investor bought the rights of a 99-year lease. A comparable "tract" today commands $150,000 annual rent. The "leasehold value" of the subject property is the present value of the bargain rent ($140,000) over the remaining lease term.

leasing assumptions

The projected lease terms, tenant retention rates, and lease- up costs used in a discounted cash flow analysis of an investment property.

leasing commission

The compensation paid to the listing and procuring agents for performing their duties in a commercial lease transaction. Leasing commissions are customarily paid partially when the lease is signed and partially when the tenant takes occupancy (or starts paying rent). Commission rates vary based on local market custom.

leasing concessions

Financial incentives given to tenants by landlords that induce the tenant to sign a lease. Concessions may include extra tenant improvements, rent abatement, planning and moving allowances, landlord assumption of existing tenant rent obligations, etc. Leasing concessions are usually expressed in dollars per square foot of rentable area, except for rent abatement, which is expressed in months of free rent.

leasing depth

The distance from the building window line to the building corridor.


A disposition of money or personal property by will.

legally competent parties

People who are recognized by law as being able to contract with others; those of legal age and sound mind.


A person who receives money or personal property under a will.

lending value

The estimated value of a property for lending purposes. It is a long-term, conservative estimate of the value of the security as determined by the lender and, therefore, does not necessarily equal Market Value or Sales Price.

length of term

"Open" indicates a term to be negotiated, i.e., 5 or 10 years. A specific date, i.e., 10/10, indicates a sublease with a term to expire on the date shown. (This, however, does not preclude negotiating a longer term with the landlord.)


A tenant. A property user who rents or leases from a property owner.


A landlord. A property owner who rents or leases to a property user.


To rent a property to a tenant. Example: Larry "lets" an apartment to Simon for $300 per month.

letter of attornment

A letter from a grantor (seller of property) to a tenant, stating that a property has been sold, and directing rent to be paid to the grantee (i.e., the new owner). (See attorn)

letter of commitment

Official notification to a borrower of the lender's intent to grant a loan. Generally specifies the terms of the loan and sets a date for the "closing." Example: four weeks after applying for a mortgage loan, the Longs received a "letter of commitment" stating that the loan was approved and that the interest rate would be 9.5% and the term 30 years.

letter of credit

A commitment, usually by a bank, made at the request of a customer, stating that the issuer will honor drafts or other demands for payment upon full compliance with the conditions specified in the letter of credit. Sometimes required by landlords to proceed with tenant improvements or lease signing with a tenant having questionable credit.

letter of intent (LOI)

A typically non-binding written agreement between parties. In commercial real estate, the letter of intent, or “LOI,” is customarily used when both parties have a serious intent to complete a lease transaction. It may also be used for some larger commercial property sales transactions.

level-payment mortgage

Requires the same payment each month (or other period) for full "amortization." See "mortgage constant," "flat." Example: Abel borrows $50,000 to buy a house. The "level-payment mortgage" at 15% interest, payable over 30 years, requires a $632.50 monthly payment for "principal" and "interest." That payment will be constant over the life of the loan.


The use of debt financing to acquire property at a price greater than the buyer’s equity investment. (See positive leverage, negative leverage.

leveraged equity

Direct undivided ownership in real estate that has been financed using borrowed funds.


To assess; to seize or collect. To levy a tax is to assess a property and set the rate of taxation. To levy an execution is to officially seize the property of a person in order to satisfy an obligation.


  1. A "debt" or financial obligation. Contrast with "asset." Example: (a) One who borrows $75,000 for a "mortgage" loan incurs a "liability" to repay that loan. (b) A "general partner" in a "partnership" has a personal "liability" for debts of the partnership in the event the partnership cannot repay its debt.
  2. A potential loss. Example: One should purchase sufficient "liability" insurance to protect against possible legal claims of someone who gets injured on one's property.

liability coverage

Insurance coverage for injuries or losses sustained by the public when on an individual's property.

liability insurance

Coverage for claims against a property owner due to bodily injury or property damage caused to another person because of negligence or an inappropriate act.


Responsible or obligated. Contrast with "exculpatory clause" and "nonrecourse." Example: One who borrows a "mortgage" loan generally becomes personally "liable" for its repayment. The lender can look to the "property" or the borrower personally for repayment.


  1. Permission. Example: If Abel did not secure "license" to cross Baker's property, it would be a "trespass."
  2. A right granted by a state to an individual to operate as a real estate "broker" or salesperson. Example: The "real estate commission" issued a salesperson "license" to Rollins. Working under the supervision of her broker, Rollins can sell and lease real estate owned by others.

licensed appraiser

A person who holds a state-issued license for the valuation of real property. Licensed appraiser qualifications are overseen nationally by the Appraisal Foundation in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP). Virtually all lenders for commercial property in the U.S. will require an appraisal by a licensed appraiser before making a loan.


A charge against property making it "security" for the payment of a "debt," "judgment," "mortgage", or taxes; it is a type of "encumbrance." A specific lien is against certain property only. A "general lien" is against all of the property owned by the debtor. Example: Abel failed to pay the "contractor" for work performed on his home. The contractor files a "mechanic's lien" against the property for the amount due.

lien holder

One who holds, or benefits from, a "lien." Example: Albert held a "mortgage" on the property, which made him a "lien holder."

lien theory

Some states interpret a mortgage as being purely a lien on real property. The mortgagee thus has no right of possession but must foreclose the lien and sell the property if the mortgagor defaults.

lien waiver

Documents signed by subcontractors and suppliers, indicating they have received payment in full.

lien, junior

A "lien" that will be paid after earlier liens have been paid. See "junior mortgage," "subordination." Example: Abel obtains a "mortgage" loan from Solid Savings to finance the acquisition of a property. To reduce the "down payment," he takes out a "second mortgage" with Baker, an investor. Solid Savings has a first lien and has first "priority" to "foreclosure" sale proceeds in case of a "default." Baker has a "junior lien" and is entitled to whatever remains, up to the debt and costs, after Solid Savings is "indemnified."

life cycle costing

In property management, comparing one type of equipment to another based on both purchase cost and operating cost over its expected useful lifetime.

life estate

Any estate in real or personal property that is limited in duration to the life of its owner or the life of some other designated person. Although classified as a freehold estate because it is a possessory estate of indefinite duration, a life estate is not an estate of inheritance. For example, Bob Smith conveys his home to his son John and reserves a life estate for himself. Bob (the life tenant) has a life estate, and John has a reversionary interest in the property. When Bob Smith dies, the fee simple property reverts to John. (See freehold estate)

life safety

Government regulations and building code requirements relating to fire, handicapped and safety requirements.

life estate pur autre vie

The form of life estate where the measuring life is that of some other person. Example: A man may grant a life estate pur autre vie to his deceased son's wife [his daughter-in-law] for the life of his grandchild. If the grandchild dies, the daughter-in-law loses her interest.

life tenant

A person in possession of a life estate.

lifting clause

A provision in a junior mortgage that allows the underlying senior loan to be replaced or refinanced so long as the amount of the new senior loan does not exceed the amount of the first lien outstanding at the time the junior loan was made. (See junior mortgage, senior loan, subordination agreement)

light industrial space

Low technology, light manufacturing, and/or warehouse/distribution space.

like kind

A term relating to the nature of a property rather than its quality or quantity. Only like kind properties qualify for a real estate exchange and the resulting tax benefit. (See exchange)

limited liability

The restriction of one's potential losses to the amount invested. The absence of personal liability. See "at-risk rules." Example: "Limited liability" is provided to stockholders in a "corporation" and to limited partners of a "limited partnership." Those parties cannot lose more than they contribute to the corporation, unless they agree to become personally liable. For example, if Collins buys stock in a corporation for $1,000, she cannot lose more than that amount. However, many lenders require personal guarantees of major stockholders before lending to corporations.

limited liability company (LLC)

LLCs are a relatively recent form of business organization. An LLC combines the most attractive features of limited partnerships and corporations. The members of an LLC enjoy the limited liability offered by a corporate form of ownership and the tax advantages of a partnership. In addition, the LLC offers flexible management structures without the complicated requirements of S corporations or the restrictions of limited partnerships. The structure and methods of establishing a new LLC, or of converting an existing entity to the LLC form, vary from state to state. (See corporation, partnership)

limited partnership

Consists of one or more general partners as well as limited partners. The business is administered by the general partners and funded, for the most part, by limited or silent partners. Each limited partner can be held liable for business losses only to the extent of his or her investment. (See general partner, partnership, passive income)

line of credit

An amount of money stipulated by a commercial bank to an active customer on an annual basis. The balance normally must be brought to zero on an agreed upon regular date. (See commercial bank)

lineal (linear) foot

The measure of one foot, in a straight line, along the ground. Example: Land along Campbell Road typically is sold at $100 per "lineal foot." This assumes a standard depth for all lots along the road.

liquidated damages

An amount predetermined by the parties to an agreement as the total amount of compensation an injured party should receive if the other party breaches a specified part of the contract.


Refers to the time it takes to convert an asset to cash that is a reflection of its market value. (See market value)

lis pendens

A recorded legal document that gives constructive notice that an action affecting a particular piece of property has been filed in a state or federal court. Lis pendens is Latin for "action pending' and is in the nature of a "quasi lien." A person who subsequently acquires an interest in that property takes it subject to any judgment that may be entered; that is, a purchaser pending a lawsuit is bound by the result of the lawsuit.


  1. A written engagement "contract" between a principal and an "agent," authorizing the agent to perform services for the principal involving the latter's property.
  2. A record of property for sale by a "broker" who has been authorized by the owner to sell.
  3. The property so listed. Example: Abel employs Baker to find a buyer for his home by giving Baker a "listing" contract. When prospective buyers visit Baker, they will examine the "listings" in Baker's office. If interested, a prospective buyer may wish to visit the "listing."

listing agent

The agent who represents the landlord or seller in a commercial property transaction. Also called the “landlord rep agent” or “seller’s agent.” Within the industry, “broker” is sometimes substituted for “agent,” as in “listing broker” and so forth.

listing agreement

An agency contract between a principal (lessor or seller) and an agent (listing agent) to sell or lease real property. Also known as a "listing."

listing presentation manual

Used by real estate brokerages to make presentations to listing prospects. A visual aid used in combination with a verbal presentation made by a real estate agent.

littoral rights

The rights of a landowner whose land borders a pond, lake or ocean shore-line where the body of water is non-flowing. Littoral rights extend to the mean high water mark of ocean or tidal waters. (See riparian rights, water rights)

living trust

An arrangement in which a property owner (trustor) transfers assets to a trustee who assumes specified duties in managing the asset. After payment of operating expenses and trustee's fees, the income generated by the trust property is paid to or used for the benefit of the designated beneficiary.

load factor

The square footage added to office usable area to comprise rentable area, expressed as a percentage of usable area. If a tenant rents 10,000 SF of usable area and the load factor is 15%, the rentable area is 11,500 SF. (See add-on factor, common-area factor, core factor, loss factor)

loan application

A lender's initial source of information on a borrower/applicant and the collateral involved; stipulates the amount of money requested and repayment terms.

loan broker listing

A mortgage loan broker's contract with a buyer to obtain a loan.

loan commitment

A lender's agreement to lend a specified amount of money; must be exercised within a set time limit.

loan constant

The annual loan payments to both principal and interest, divided by the loan amount, and expressed as a percentage. Unless the loan is interest-only, the loan constant will be higher than the quoted interest rate. Also called the “debt service constant.”

loan coverage ratio

See debt service coverage ratio.

loan fees

Also called loan origination fees. Costs charged by a lender for giving out a loan; may include points, tax service fees, an appraisal fee, etc.

loan origination fee

The processing of a mortgage application is known as loan origination. When a mortgage loan is originated, a loan origination fee, or transfer fee, is charged by most lenders to cover the expenses involved in generating the loan. These include the loan officer's salary, paperwork and the lender's other costs of doing business.

loan-to-value ratio

The loan amount proposed for a property, divided by the lender’s appraised value for the property.

loan-to-value ratio (LTV)

The portion of the amount borrowed compared to the cost or value of the property purchased. Example: Abel bought a $100,000 house and arranged a $90,000 "mortgage" loan, resulting in a 90% "loan-to-value ratio."

lock-in clause

A condition in a promissory note that prohibits prepayment of the note.


Distance measured east or west on the earth's surface, measured by the angle which the meridian through a place makes with some standard meridian, as that of Greenwich, Great Britain or Paris, France. Longitude may be measured in time (longitude in time) or in degrees (longitude in arc). (See latitude, meridian)

loss factor

The square footage deducted from office rentable area to comprise usable area, expressed as a percentage of rentable area. If a tenant rents 11,500 SF and the loss factor is 15%, the usable area is 9,775 SF. (See load factor, common-area factor, add-on factor, core factor)

lot-and-block (recorded plat) system

A method of describing real property that identifies a parcel of land by reference to lot and block numbers within a subdivision, as specified on a recorded subdivision plat.

low-rise office building

Fewer than seven stories high above ground level.

low/doc or no/doc loan

Loans that require little or no documentation regarding the borrower's income, assets or liabilities. Because of the higher perceived risk, these loans will usually require a larger down payment; higher interest rate and high credit score for borrowers. Conventional qualifying ratios do not apply.


"Leasable square feet." (See leasable area)


The duty of loyalty requires the agent to place the principal's interests above those of all others, including the agent's own self-interest. The agent must be particularly sensitive to any possible conflicts of interest. Confidentiality about the principal's personal affairs is a key element of loyalty.