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Negative Amortization
Amortization in which the payment made is insufficient to fund complete repayment of the loan at its termination. Usually occurs when the increase in the monthly payment is limited by a ceiling. The portion of the payment which should be paid is added to the remaining balance owed. The balance
owed may increase, rather than decrease over the life of the loan.
Net Lease
A commercial real estate lease in which the tenant regularly pays not only for the space (as he does with a gross lease) but for a portion of the landlord’s operating costs as well. When all three of the usual costs--taxes, maintenance and insurance--are passed on, the arrangement is known as a "triple net lease." Because these costs are variable and almost never decrease, a net lease favors the landlord. Accordingly, it may be possible for a tenant to bargain for a net lease with caps or ceilings, which limits the amount of rent the tenant must pay. For example, a net lease with caps may specify that an increase in taxes beyond a certain point (or any new taxes) will be paid by the landlord. The
same kind of protection can be designed to cover increased insurance premiums and maintenance expenses. Contrast with gross lease.
Net Listing
A price, which must be expressly agreed upon, below which the owner will not sell the property and at which the broker will not receive a commission; the broker receives the excess over and above the net listing price as commission. The broker in this type of listing will have a very hard time maintaining his fiduciary responsibilities to his seller since his interests are potentially at odds with the interests of the seller.
Non-Escrowing Loan
Typically, mortgage lenders require escrow accounts for property taxes, hazard insurance, and sometimes, homeowner's association dues. Monthly contributions to these accounts are rolled into a lender's mortgage payment. In Texas, escrow accounts are non-interest bearing, so many borrowers prefer the option of keeping the monies for their hazard insurance and property taxes in their own interest bearing accounts, until they become due. Most lenders only allow non-escrowing loans on mortgages with an 80% or lower, loan-to-value ratio.
Property taxes can be paid as late as January 31st of the following year before interest and penalties begin to accrue. If the borrower has the discipline to save the monies for taxes and insurance independently, a non-escrowing loan would be the smart choice. Most lenders charge a one-time fee at closing for selecting the non-escrow option. Non-escrowing loans also have lower closing costs since the lender does not collect reserves, which place a 2-3 month cushion of pro-rated payments in the escrow account. Additionally, the seller's pro-rated share of the year's property taxes is applied directly to the buyer's closing costs, instead of being placed into the escrow account.
Note
A written instrument of credit attesting to a debt and promise to pay.
Nuisance
Something that interferes with the use of property by being irritating, offensive, obstructive or dangerous. Nuisances include a wide range of conditions, everything from a chemical plant's noxious odors to a neighbor's dog barking. The former would be a "public nuisance," one affecting many people, while the other would be a "private nuisance," limited to making your life difficult, unless the dog was bothering others. Lawsuits may be brought to abate (remove or reduce) a nuisance. See quiet enjoyment, attractive nuisance.
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