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naked title
Bare title to the property, lacking the usual rights and privileges of ownership. A trustee in a deed of trust securing instrument may hold the title to a secured property, but only such title as is needed to carry out the terms of the lien document.
negative amortization
A gradual increase in mortgage debt that occurs when the monthly payment is not large enough to cover the entire principal and interest due. The amount of the shortfall is added to the remaining balance to create "negative" amortization.
negative declaration
A declaration by a developer that a project will not have a negative impact on the environment.
negative easement
An easement where the owner of a servient estate is prohibited from doing something on his or her estate that is otherwise lawful, because it will affect the dominant estate. (See easement)
negligence
The failure to use ordinary or reasonable care under the circumstances.
negligent misrepresentation
A negligent misrepresentation occurs when the broker should have known that a statement about a material fact was false. The fact that the broker may actually be ignorant about the issue is no excuse.
negotiable instrument
A written promise or order to pay a specific sum of money that may be transferred by endorsement or delivery. The transferee then has the original payee's right to payment.
neighborhood information request
A questionnaire used by brokers to obtain information about the neighborhood where a listed property is located. The questionnaire is completed by the homeowner and can provide valuable information that will aid in the sale of the property. The questionnaire should include questions about neighborhood schools, recreational facilities, churches, shopping centers, medical facilities, and other features that may be important to prospective buyers.
net cash flow
The income that remains for an investment property after the monthly operating income is reduced by the monthly housing expense, which includes principal, interest, taxes, and insurance (PITI) for the mortgage, homeowners' association dues, leasehold payments, and subordinate financing payments.
net income approach
A method of pricing multiple unit rental properties where the desire to buy is driven by the property's ability to generate cash flow and profit. Most often used to price rental properties of 2 or more units. When pricing single-family rental homes and condos, the market approach is preferable.
net lease
A lease requiring the tenant to pay not only rent but also costs incurred in maintaining the property, including taxes, insurance, utilities and repairs.
net listing
An employment contract in which the broker receives as commission all excess monies over and above the minimum sales price agreed on by broker and seller. Because of the danger of unethical practices in such a listing, its use is discouraged in most states.
net operating income (NOI)
The income projected for an income-producing property after deducting losses for vacancy, collection and operating expenses.
net proceeds
The cash received after paying all liens and expenses.
networking
Generating prospects through a real estate professional's communications with friends and professional associates.
net worth
Assets less liabilities
no cash-out refinance
A refinance transaction in which the new mortgage amount is limited to the sum of the remaining balance of the existing first mortgage, closing costs (including prepaid items), points, the amount required to satisfy any mortgage liens that are more than one year old (if the borrower chooses to satisfy them), and other funds for the borrower's use (as long as the amount does not exceed 1 percent of the principal amount of the new mortgage).
no-choice rule
If a real estate transaction qualifies as an exchange, it must be treated as an exchange. An exchanger who qualifies for the 1031 tax-deferred exchange has "no choice," they cannot recognize the gain or loss.
no loan, no commission
A listing agreement requiring that escrow be closed and title transferred before an agent is entitled to a commission.
no-loss rule
If a real estate transaction qualifiies as an exchange, "no loss" can be recognized.
nominal damages
Monetary damages of a token amount awarded for a wrongful act where no loss occurred.
nominal interest rate
The stated interest rate in a note or contract, which may differ from the true or effective interest rate, especially if the lender discounts the loan and advances less than the full amount.
non-agent
An intermediary between a buyer and seller, or landlord and tenant, who assists both parties with a transaction without representing either. Also known as a facilitator, transaction broker, transaction coordinator and contract broker.
non-conforming loan
A mortgage loan that does not meet Fannie Mae and Freddie Mac underwriting guidelines. Non-conforming loans are available as both fixed and adjustable rate mortgages.
non-conforming use
A use of property, legally permitted to continue as such, in spite of the orignial zoning ordinance which prohibited such use for the area.
non-cumulative zoning
Zoning that allows only the stated use and not more restrictive uses.
non-disturbance clause
An agreement where the mortgagee agrees to honor a tenant's lease in the event that the mortgage is foreclosed.
non-geographic farming
Farming/prospecting a particular segment of the market such as an ethinic group or nationality, as opposed to a geographic area.
non-homogeneity
A lack of uniformity; dissimilarity. Because no two parcels of land are exactly alike, real estate is said to be nonhomogeneous.
non-institutional lenders
Credit unions, pension funds, private individuals and real estate investment trusts.
non-judicial foreclosure
The process of selling real property under a power of sale in a mortgage or deed of trust that is in default. One disadvantage is that the lender cannot obtain a deficiency judgment. Also, some title insurance companies are reluctant to issue a policy unless a court has judicially foreclosed the mortgagor's interest.
non-liquid asset
An asset that cannot easily be converted into cash.
notary public
A person who acknowledges oaths, such as the signing of a grant deed or deed of trust; must be duly appointed by the proper authorities.
note
A document signed by the borrower of a loan and stating the loan amount, the interest rate, the time and method of repayment and the obligation to repay. The note serves as evidence of the debt. When secured by a mortgage, it is called a mortgage note, and the mortgagee is named as the payee. In a trust deed, the note is usually made payable to the bearer or holder. The note may also contain some of the same provisions as in the mortgage or trust deed document, such as prepayment or acceleration.
note rate
The interest rate stated on a mortgage note.
notice of cessation
A notice that gives subcontractors 30 days and gives prime contractors 60 days to file liens from the date of cessation of work.
notice of completion
A document recorded to give constructive notice that a building job has been completed.
notice of default
A notice to a defaulting party announcing that a default has occurred. The defaulting party is usually provided a grace period during which to cure the default. Notices of default are frequently provided for in contracts for deeds and mortgages and are sometimes required by operation of law.
notice of deliquency
In junior financing, where the borrower gives the senior lender permission to notify the junior lender in the event of a default.
notice of nonresponsibility
A legal notice designed to relieve a property owner of responsibility for the cost of improvements ordered by another person (such as a tenant). The owner usually gives notice that he or she will not be responsible for the work done by posting notice in some conspicuous place on the property, and by recording a verified copy in the public records.
novation
Substituting a new obligation for an old one or substituting new parties to an existing obligation.
nuisance
That which annoys and disturbs one in possession of his or her property, rendering its ordinary use physically uncomfortable.
nuncupative will
An oral will declared by the testator in his or her final illness, made before witnesses and then created in legal written form.
