Real Estate Glossary N [Part 1]
A clause in a contract or lease that says someone can’t own or run a business nearby that would compete with one of the parties to the contract. This clause is also called a “no-compete clause.” The courts will follow this kind of rule as long as the time and place are reasonable. Also, if adding a non-compete clause gives the contract more value, that value is usually counted as regular income for the party who got it. The clause’s creator then puts this value in capital and spreads it out over the life of the covenant. There are often non competition clauses in percentage leases for shopping centres. For example, a shoe store tenant might agree that the centre won’t open a competing shoe store across the street. When it comes to federal and state antitrust laws, these kinds of clauses have been closely looked at.
Nonconforming conventional loan
A conventional loan that does not meet one or more of the underwriting requirements needed by Fannie Mae and Freddie Mac for acquisition in the secondary market.
A land use that is incompatible with the present zoning classification but is allowed to continue since it predates the current zoning. To be allowed to continue, the usage must be continuous, and the property structures cannot be significantly improved.
An authorized use of real property that was established and maintained lawfully at the time of its establishment but no longer complies with current zoning laws. The structure itself, the lot size, the use of the land, or the use of the structure could all be considered nonconforming uses. Although the nonconforming use status does not have to be ceased with the sale or lease of the property, it will eventually be removed. Allowing the use to continue for a reasonable period of time allows the government to ensure that the use will not continue indefinitely while also avoiding having to provide just compensation for condemning the land. When buying a nonconforming structure, buyers should be aware that zoning laws may prevent the structure from being rebuilt if it is substantially destroyed by fire or other means. In this instance, a buyer should speak with an insurance representative about the possibility of acquiring demolition insurance. A nonconforming use may also come to an end if the property is abandoned.
Failure to expose a fact, whether intentionally or unintentionally.
- A clause in a mortgage that says the mortgagee agrees not to kick out rent-paying tenants if the mortgagee forecloses on the building of the mortgagor/lessor. If there wasn’t such a clause, a foreclosure action could end the lease of a renter who signed the lease after the mortgage.
2.When a seller chooses to keep mineral rights to property that is being sold, the seller and buyer sign a non-disturbance agreement that says the seller won’t get in the way of any building or development on the surface of the land.
In the case of a loan foreclosure, a mortgage condition that provides for the continuance of any leases.
The notion that every property, even identical houses in a tract subdivision, is unique and has its own “bundle of rights.” All buyers, sellers, and transactions are nonhomogeneous, which explains why property is valuable and all transactions are unique.
Outside of the judicial system, the lender or a trustee sells the property of defaulting debtors at public auction. It must adhere to legislative rules, particularly when it comes to public announcements of the sale.
A power of sale in a defaulted mortgage or deed of trust allows you to sell real estate. The lender cannot then get a deficiency judgment in many states, but not all. Furthermore, some title insurance firms will not offer a policy unless the mortgagor’s interest has been judicially foreclosed.
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The non-financial costs and advantages of a business decision.
Water contamination from a dispersed source, such as the atmosphere or agricultural land.
A nonprofit corporation created for a charitable, political, fraternal, educational, or trade purpose. These companies, often known as eleemosynary corporations, do not have shareholders (as do profit-making corporations). They only have members who have no entitlement to corporate dividends or assets, although not being individually accountable for corporate debts. Nonprofit corporations have control over their assets, and their operations are managed by a board of directors. These corporations can enter into contracts and buy and sell real and personal property in their own names. IRC Section 501 contains the specific tax provisions that apply to nonprofit corporations.
Non Realty items
Non Recourse loan
A loan in which the borrower is not personally responsible for the debt. A non recourse loan’s lender is often convinced that the asset utilized as security is adequate for the loan. Also known as a “dry” mortgage.
In a real estate syndication, nonrecourse financing is utilized to allow limited partners to contribute their proportionate share of the mortgage to their tax base for the purposes of computing depreciation deductions or taking other losses.
Loans that release the borrower from personal obligation but do not release the property as collateral.
Normal sale price
The purchase price of a comparable property after adjusting for non-market financing and non-arm’s-length negotiating (conditions of sale).
Normal wear and tear
Physical wear and tear that happens when a property is used normally, but not because of negligence, carelessness, an accident, or abuse by the occupants or their guests. Normal wear and tear is not the tenant’s fault if the value of a rental home goes down. So, the landlord can’t keep the security deposit because of this kind of damage. Normal wear and tear is defined by the Uniform Residential Landlord and Tenant Act as the value of something going down because of normal and reasonable use. Not included in this, though, are things that are missing from the dwelling unit. Along with functional and economic obsolescence, normal wear and tear is a major cause of property depreciation.
The length of time a tenant lives in a unit is an important factor in figuring out if the wear and tear is fair. For example, if the same renter has lived in an apartment for three years, it’s likely that the walls and carpet will need to be painted and cleaned.
Physical depreciation that occurs as a result of normal usage of a property.
An appraisal phrase describing a property’s running expenditures as they would occur in a normal year.
Normalized net operating income
The net income number obtained by subtracting a typical year’s operating expenditures from a typical year’s effective gross income.
A stair tread’s rounded outer face.
A person who works for the government and acts as an official witness. Notaries are responsible for giving oaths, attesting and certifying documents with their signature and official seal, which gives them credibility and authenticity, taking acknowledgments of deeds and other transfers, and doing official things like protesting rates and bills. If there is no seal, the notarization doesn’t count. If someone has a stake in a document, they can’t be a notary public for that document. In some states, the notary has to put up a “fidelity bond.”
The document (contract) that defines the particular conditions of a debt obligation and the borrower’s accountability for the obligation.
A document that shows the loan amount, the interest rate, when and how the loan will be paid back, and the borrower’s obligation to do so. The note shows that you owe money. When a mortgage is used as security, the note is called a mortgage note, and the payee is the mortgagee. Usually, a note in a trust deed is made payable to the bearer or the holder. Some of the same rules that are in the mortgage or trust deed document may also be in the note, such as the ability to pay off the loan early or get it paid off faster.
A written promise to return an entity a specific sum on a specific date.
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Contractual information. When two parties agree to end a one-year lease, for example, one of the parties must normally offer 30 days’ written notice before the lease ends. Though oral notice is acceptable, it is usually preferable to provide written notice so that necessary notice may be proven.
A basic paragraph in most contracts covers the details of proper notification, such as "Any notices, requests, or demands from either party must be in writing and delivered personally or by Registered or Certified Mail, postage prepaid, to the seller and buyer at the addresses listed below. When notice is mailed, it is considered given.
Notice of assessment
A notice sent to the owner of real property by a state or local taxing body detailing the property’s assessed value. Assume a home’s market worth is $170,000, with $40,000 assigned to the fee simple land and $130,000 given to the modifications. Assume that the assessed value is 70 percent of the market value under local legislation. As a result, the assessed value of the renovations is $91,000, while the assessed value of the land is $28,000.
Notice of completion
A document that is filed in some states to let the public know that a construction job is done and that mechanics’ liens must be filed within a certain amount of time for them to be valid. The notice of completion can be sent out by either the owner or the general contractor. However, the contractor usually can’t send out the notice until the owner has been asked to do so in writing and hasn’t done so.
If a mechanic does not file a written notice of lien with the clerk of the court where the property is located within the time limit, he or she will lose the right to a lien. Note that recording or filing the notice of lien is usually not enough to create a lien. The lien must be recorded with the clerk of the right circuit court, and a hearing must be held to find out if there is a good reason to enforce the lien.
Notice of consent
A legal process that lets a state official handle legal matters for people who don’t live in that state. A sub-divider or broker from out of state, for example, often has to file a notice of consent in order to do business in a state.
Notice of default
A notice sent to a defaulting party informing them of their default. A grace period is normally given to the delinquent party to cure the default. Notices of default are regularly included in deed and mortgage contracts, and they are occasionally required by law. If a defaulting party receives a notice of default on Thursday before a long holiday weekend, the grace period should be at least five working days; otherwise, the defaulting party may not have enough time to remedy the default.
To avoid forfeiture of the property due to unintended default, the wise purchaser includes a language in the contract for deed mandating notice of default and a grace period for remedy of the default. Such notification shall be in writing and issued to the defaulting party at an address stated in the contract by registered or certified mail, return receipt requested.
As a reminder of the default, a letter is issued to the defaulting party.
Notice of dishonor
Document issued by a notary public on behalf of a person who holds a check whose issuer has failed to honor the payment terms. The notice serves as legal proof that the debt has not been settled.
Unless waived, the notice of dishonor is a crucial ingredient in any legal action brought by the holder against the endorser or drawer (as it usually is in most mortgage notes). “presentment” and “notice of protest” are two of the holder’s related rights (to obtain an official certification of the nonpayment).
Notice of lien
In some states, a mechanic’s lien application must include a specific written notice. The appropriate court where the property is located must be notified of the lien. A copy of the notice must be served on the owner and any other interested parties in the same way that a summons is served under the law: The notification must include the amount of the claim, the labor or material provided, an adequate description of the property, and the names of the parties who contracted for the improvement, the general contractor, the property owners, and any other person or persons with an interest in the property. A formal notice of lien served on any one of numerous joint owners is usually considered service on all owners. The notice of lien must be submitted within a particular amount of time after the improvement against which it is filed is completed.
The lien is only attached after the court has ruled that there is probable cause to believe the mechanic’s claim is valid. Many states now demand a probable cause hearing in reaction to recent Supreme Court judgments upholding an individual’s constitutional right to notice and a hearing before losing property rights.
Notice of nonresponsibility
A legal notice intended to absolve a property owner of liability for the costs of modifications authorized by someone else (such as a tenant). Owners typically give notice that they will not be responsible for the work by posting a notice in a prominent location on the property and registering a verified copy in the public records.
Notice to quit
Allows a landlord or tenant, under specified conditions, to terminate a tenancy without the consent of the other.
A landlord’s written notice to a tenant that the landlord wishes to reclaim ownership of the leased premises and that the tenant must vacate and surrender the property. If there is a breach of lease, or if the tenancy is at will or by sufferance, the notice to quit can state that the tenant must vacate either at the end of the lease period or immediately. A notice to quit based on nonpayment of rent usually allows less time to cure the default than a notice to quit based on property damage or another reason. This word is occasionally used to describe the notice given by renters to their landlords that they intend to vacate on a specific date.
A tenant’s notice to depart the rented property.
Possession of real estate that is widely recognized.
A contract that has been substituted for another with the consent of all parties. For example, in design and build contracts, the client’s design team becomes responsible to the head contractor under a novated contract.
The acceptance of a new debtor in place of an old one by the parties to an agreement; the substitution of new parties to an existing obligation by the parties to an agreement. In the case of a loan assumption, the lender may release the seller and replace the buyer as the primary accountable party for the mortgage obligation. Novation necessitates the intent to terminate the original contract, as well as its own consideration and other criteria of a legal contract. However, unless a novation occurs, a tenant who assigns a lease to another is still accountable for the original lease.
In a boiler, this is the component that sprays a fuel-air mixture into the combustion chamber for burning.
Doing something or acting in a way that makes it hard for someone else to use or enjoy their property in a legal way is against the law. A private nuisance only affects a small number of people, while a public nuisance, like too much noise from jet planes, affects everyone in the area. If a use is considered a nuisance, the person who is bothered by it can sue for damages or an injunction to stop it. For example, a neighbor could be stopped from running an open garbage dump. Activities that make too much noise, smell bad, or pose fire risks are common examples of nuisances.
Null and void (NULO)
A contract that can’t be enforced.
Without legal force or effect; worthless; unenforceable; not binding. Restrictive covenants in a deed or other instrument that are discriminatory are void.
A will that was spoken out loud by the testator right before he or she died, in front of witnesses, and then quickly put into writing by the witnesses. Most states don’t let this kind of will stand, and it is usually only used by people in the military or to give away personal items.
This is a slang term for the cost of keeping a property, such as the monthly nut for an investment property.
Real Estate Glossary N [Part 3]