A financing arrangement in which the monthly payments
are less than the true amortized amounts and the loan
balance increases over the term of the loan rather than
decreases; an interest shortage that is added to unpaid
A declaration by a developer that a project will not
have a negative impact on the environment.
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
The failure to use ordinary or reasonable care under the
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.
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.
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.
A lease requiring the tenant to pay not only rent but
also costs incurred in maintaining the property,
including taxes, insurance, utilities and repairs.
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
The cash received after paying all liens and expenses.
Assets less liabilities.
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.
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.
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.
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
A use of property, legally permitted to continue as
such, in spite of the original zoning ordinance which
prohibited such use for the area.
Zoning that allows only the stated use and not more
An agreement where the mortgagee agrees to honor a
tenant's lease in the event that the mortgage is
A lack of uniformity; dissimilarity. Because no two
parcels of land are exactly alike, real estate is said
to be non-homogeneous.
Credit unions, pension funds, private individuals and
real estate investment trusts.
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.
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 (original 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.
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 delinquency
In junior financing, where the borrower gives the senior
lender permission to notify the junior lender in the
event of a default.
notice of non-responsibility
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.
notice to quit
A written notice given by the landlord to his tenant
requiring that the tenant leave the lease premises.
Substituting a new obligation for an old one or
substituting new parties to an existing obligation.
That which annoys and disturbs one in possession of his
or her property, rendering its ordinary use physically
null and void
Invalid and unenforceable
An oral will declared by the testator in his or her
final illness, made before witnesses and then created in
legal written form.