Glossary of Debt Related Terms

Laches

An unreasonable delay by a party making a claim or bringing an action, so that the rights of said party are waived. Laches are not controlled by a statute of limitations.

Land Residual Technique

An appraisal technique by which land value is determined by first determining the net return attributable to the building only, and deducting it from the total return to the property (may be estimated), the residual amount is capitalized to find the land value. The building value may be determined by construction costs (new building), depreciated construction costs (it only a few years old), or estimated present construction costs (if an older building).

Landowner's Royalty

In oil and gas leases, the portion of the value of each barrel of oil which goes to the property owner.

Late Charge

A penalty for failure to pay an installment payment on time. Usually not allowed as interest for tax deductions. May or may not be included as usury. If not, the amount of late charge is either set by statute or must be "reasonable."

Late Payment

A payment made later than agreed upon in a credit contract and on which additional charges may be imposed.

Lateral Support

The right of a landowner to the natural support of his land by adjoining land. The adjoining owner has the duty not to change his land (such as lowering it) so as to cause this support to be weakened or removed.

Lease With Option To Purchase

A lease under which the lessee has the right to purchase the property. The price and terms of the purchase must be set forth for the option to be valid. The option may run for the length of the lease or only for a portion of the lease period. Legal Description: A description by which property can be definitely located by reference to surveys or recorded maps. Sometimes referred to simply as the legal.

Legal Owner

The term has come to be used as a technical difference from the equitable owner, and not as opposed to an illegal owner. The legal owner has title to the property, although the title may actually carry no rights to the property other than a lien.

Lessee's Interest

In appraising the value of a lessees interest to determine the value of a potential sublease of assignment (sale) of the lease, the value is the market value of the property, less the interest of the lessor. The lessor's interest would be largely determined by the ratio of the return on the lease to the market value without the lease. Lien: A recorded document which claims an interest in real property as security for a debt owed. Such liability may be created by contract, such as a deed of trust, or by a court judgment.

Liability on an Account

Legal responsibility to repay debt.

Lien Waiver (waiver Of Liens)

For our purposes, a waiver of mechanic's lien rights, signed by subcontractors so that the owner or general contractor can receive a draw on a construction loan.

Liquidated Damages

A definite amount of damages, set forth in a contract, to be paid by the party breaching the contract. A predetermined estimate of actual damages from a breach.

Lis Pendens

Legal notice that a lawsuit is pending. Also called a notice of action.

Loan Constant

The yearly percentage of interest which remains the same over the life of an amortized loan, based on the monthly payment in relation to the principal originally loaned. For example: A $1000 loan at 9% interest for 20 years can be amortized at $9.00 per month. The constant interest rate is figured by finding one year's payments ($9.00 x 12 months = $108,00), and expressing this amount as a percentage of the principal originally borrowed (10.8% of $1000).

Loan Policy

A title insurance policy insuring a mortgagee, or beneficiary under a deed of trust, against loss caused by invalid title in the borrower, or loss caused by invalid title in the borrower, or loss of priority of the mortgage or deed of trust.

Loan Ratio

The ratio, expressed as a percentage, of the amount of a loan to the value or selling price of real property. Usually, the higher the percentage, the greater the interest charged. Maximum percentages for banks, savings and loans, or government insured loans, is set by statute.

Loan toValue Ratio

The ratio of the mortgage loan's principal to the property's appraised value or its sales price, whichever is lower.

Long Term Capital Gain

Gain on the sale of a capital asset which has been held for a specified time or longer. Long term capital gain is taxed at a special rate and not as ordinary income.