Glossary of Debt Related Terms

Negative Amortization

Occurs when your monthly payments are not large enough to pay all the interest due on the loan. This unpaid interest is added to the unpaid balance of the loan. The danger of negative amortization is that the buyer ends up owing more than the original amount of the loan.

Negotiable Instrument

According to the Uniform Negotiable Instruments Act, an instrument is negotiable when it is in writing and signed, containing an unconditional promise or order to pay a certain amount of money, on demand, or at a definite future date, to the bearer, to order, or to a named or certain drawee.

Net Effective Income

The borrower's gross income minus federal income tax.

Net Lease

A lease requiring the tenant to pay, in addition to a fixed rental, the expenses of the property leased, such as taxes, insurance, maintenance, etc. In some states the terms net net, net net net, triple net, and other such repetitions are used.

Net Worth

The difference between total assets and liabilities of an individual, corporations, etc.

No Bonus Clause

A clause under the eminent domain section of a lease, giving the lessee the right to recover only the value of his physical improvements in the event of a taking, and not the value of the leasehold interest (the difference between the fixed rent of the lease and current market rental value). Not applicable in all states.

Nonbearing Wall

A wall used only to separate areas, and which carries only its own weight

Nonexclusive Listing

A listing under which the real estate broker has an exclusive listing as opposed to other agents, but the owner may sell the property without using an agent, and not be liable to pay a commission. Also called an agency agreement.

Nonrecourse Loan

A loan not allowing for a deficiency judgment. The lender's only recourse in the event of default is the security (property) and the borrower is not personally liable.

Notarization

The certification by a Notary Public that a person signing a document has been properly identified. Notarization does not certify the content of a document, only validity of signature.

Notice Of Cessation

A notice stating that work has stopped on a construction project. Done to accelerate the period for filing a mechanic's lien.

Notorious Possession

A requirement for adverse possession. Possession so open (notorious) that the owner is presumed to have notice of it and its extent.

Nuncupative Will

An oral will, usually in a deathbed situation, before witnesses who later testify to its authenticity.