Oscar Castillo
"Residential" Real Estate


    - Glossary





Nanny Tax - A "federal tax" that must be paid by people who hire household help (a babysitter, maid, gardener, etc.) and pay them a total of more than a specified threshold amount during the tax year. The reason the IRS charges the nanny tax is because it considers an ongoing household helper to be the taxpayer's employee.  As such, the taxpayer becomes an employer and must pay Social Security, Medicare and federal unemployment taxes on the wages paid to that employee. There may be State-level nanny taxes as well.

Natural Hazard Disclosure (NHD)   the Natural Hazards Disclosure Act of California, effective June 1, 1998 (as amended June 9, 1998), requires that sellers of real property and their agent provide any prospective buyer with a Natural Hazard Disclosure Statement when the property being sold lies within one or more state-mapped hazard areas.

Neighborhood Assistance Corporation of America (NACA)   a nonprofit community advocacy and homeownership organization with the primary goal of building strong, healthy neighborhoods in urban and rural areas nationwide through affordable homeownership.

Neighborhood Stabilization Program (NSP)   a program established in 2008 by the Department of Housing and Urban Development (HUD) to stabilize communities that have suffered from foreclosures and abandonment. Through the purchase and redevelopment of foreclosed and abandoned homes and residential properties, the goal of the program is being realized

Negative amortization   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 principal.

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.

Negative Equity   When a home’s current value is less than the existing mortgage on that home, the house is said to be in a ‘negative equity’ situation  (other terms used to describe this situation are ‘underwater’ and/or  ‘upside down’).

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.

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 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.

Net worth   figured out by a simple formula …Assets less liabilities

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-Arm's-Length Transaction   sale of a property that involves a buyer and a seller who have a relationship (family members, business associates, friends, landlord/tenant, etc.) Because of this relationship, there may be no competitive offers received on the property. As a result, the selling price and the terms and conditions of the transaction are not subject to prevailing marketplace dynamics and may not represent "fair market value." The opposite is an arm’s-length transaction.

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.

Nonconforming 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.

Nondisturbance clause   an agreement where the mortgagee agrees to honor a tenant's lease in the event that the mortgage is foreclosed.

Noninstitutional lenders   Credit unions, pension funds, private individuals and real estate investment trusts.

Nonjudicial 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.

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 state 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 (100% or temporary stop) of work.

Notice of Default.  (NOD) Once a mortgage is more than 30 days late, it is in default. The default notice is the “kick off” for the foreclosure proceedings to begin. A notice is sent to the borrower informing them that they need to remedy the default and bring a mortgage current. 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 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.

Notice Of Rescission   A legal document used when the defaulting party has cured or corrected the default.  Also referred to as a  written document that cancels or annuls the effect of a notice of default when a default has been cured (reinstated). This document does not require the acknowledgment of a notary public, but must be recorded with the county recorder in the county in which the property is located.

Notice to accelerate      After a mortgage is unpaid for 90 days, lenders will send a borrower—via certified mail—a notice to accelerate the loan. This notice informs the borrower that the entire amount of his loan is called due. For example, if a borrower has a principal mortgage balance of $428,000 and has missed over three months of payments, he now owes the bank the entire $428,000 balance. The bank gives a “drop dead date” informing the borrower that he has until a specified date to come up with the balance, and if he does not, the home is foreclosed.

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.


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