Naked Option
An opportunity to buy stock at a fixed price, offered by a seller who does not own the stock to back up the promise. If the buyer wants to exercise the option, the seller must purchase the stock at market price to make good on the offer.

Drugs that dull the senses or alter perception. Popularly used to describe drugs that cannot be legally possessed, sold, or transported except for medicinal uses for which a physician or dentist's prescription is required. Among these "controlled substances" are heroin, cocaine, L.S.D., opium, methamphetamine ("speed"), angel dust, hashish, and numereous chemically-designed hallucinagenics, as well as drugs with a legitimate medical use such as morphine. Dealing in any of these narcotics is a felony (subject to a prison term) under both state and federal laws, although mere use may be a misdemeanor. Marijuana is also an illicit narcotic, but possession of small amounts for personal use is a misdemeanor in most states.

National Credit Union Administration (NCUA)
A federal agency that charters and supervises federal credit unions. The NCUA insures savings in federal and most state-chartered credit unions across the country through the National Credit Union Share Insurance Fund (NCUSIF).

National Credit Union Share Insurance Fund (NCUSIF)
A federal fund backed by the full faith and credit of the U.S. government that provides deposit insurance for credit unions in much the same way as the FDIC provides insurance for banks.

National Labor Relations Board (NLRB)
An independent agency created by Congress in 1935 to administer the National Labor Relations Act. The NLRB's purposes are to remedy unfair labor practices by unions or employers, and to hold elections to determine whether a particular group of employees wants to be represented by a particular union. NLRB refers both to the agency as a whole and to five members who sit as a court and issue decisions in labor disputes. These decisions can be appealed to the U.S. Court of Appeals.

National Visa Center (NVC)
The NVC is run by a private company under contract with the U.S. Department of State. Federal immigration agencies send all approved green card petitions and green card lottery registrations to the NVC. It acts as an intermediary, corresponding with the applicant and ultimately forwarding the case to a U.S. consulate in another country for final processing.

Natural Law
Principles considered to come from nature and to bind human society in the absence of or in addition to human-made (positive) law.For example, the Declaration of Independence's statement that "all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness..." is an assertion of natural law.

Natural Person
A living, breathing human being, as opposed to a legal entity such as a corporation. Different rules and protections apply to natural persons and corporations, such as the Fifth Amendment right against self-incrimination, which applies only to natural persons.

The process by which a foreign person becomes a U.S. citizen. Eligibility is, in almost all cases, dependent first and foremost on having held a green card for several years. Applicants must also meet other testing and residence requirements. A naturalized U.S. citizen has virtually the same rights as a native-born U.S. citizen.

Near V. Minnesota (1931)
A U.S. Supreme Court case in which the Court ruled that prior restraint on publications is a violation of free speech and free press. In so doing, the Court struck down a state law that allowed the police to confiscate publications that were malicious, scandalous, or obscene. The case involved a virulently anti-Semitic pamphlet.

Things that are essential to a person's ordinary life, considering their individual circumstances. For most people, this includes what is needed for health and comfort and excludes things that only provide pleasure.

Necessary Inference
A conclusion that is dictated by a fact or premise. If the underlying fact or premise is true, then the necessary inference is an unavoidable conclusion that must be drawn.

Necessary Party
A person or entity whose interests will be affected by the outcome of a lawsuit and whose absence from the case prevents a judgment on all issues, but who cannot be joined in the lawsuit because that would deny jurisdiction to the court hearing the case.

See: necessaries

Negative Amortization
See: capitalized interest

Negative Averment
In a legal pleading, a negative statement or allegation that is also an assertion of a fact, for example

Negative Income
See: loss

Negative Pregnant
A denial of wrongdoing that implies the opposite by denying only a qualification of the allegation, not the allegation itself. For example, if a defendant who is accused of embezzling a million dollars in 2007 denies the allegation by saying, "I did not embezzle a million dollars in 2007," the denial is pregnant with the possibility that the defendant may have embezzled a different sum of money in a different year.

Failure to exercise the care toward others that a reasonable or prudent person would use in the same circumstances, or taking action that such a reasonable person would not, resulting in unintentional harm to another. Negligence forms a common basis for civil litigation, with plaintiffs suing for damages based on a variety of injuries, from physical or property damage to business errors and miscalculations. The injured party (plaintiff) must prove: 1) that the allegedly negligent defendant had a duty to the injured party or to the general public, 2) that the defendant's action (or failure to act) was not what a reasonably prudent person would have done, and 3) that the damages were directly ("proximately") caused by the negligence. An added factor in the formula for determining negligence is whether the damages were "reasonably foreseeable" at the time of the alleged carelessness. (See also: contributory negligence, comparative negligence, foreseeable risk, damages, negligence per se, gross negligence, family purpose doctrine, joint tortfeasors, tortfeasor, tort, liability, res ipsa loquitur)

Negligence Per Se
Negligence due to the violation of a law meant to protect the public, such as a speed limit or building code. Unlike ordinary negligence, a plaintiff alleging negligence per se need not prove that a reasonable person should have acted differently -- the conduct is automatically considered negligent, and the focus of the suit will be over whether it proximately caused damage to the plaintiff.

See: negligence

Negligent Tort
A tort that occurs when a tortfeasor does not give the proper duty of care. (See also: negligence)

Negotiable Instrument
A written document that represents an unconditional promise to pay a specified amount of money upon the demand of its owner. Examples include checks and promissory notes. Negotiable instruments can be transferred from one person to another, as when you write "pay to the order of" on the back of a check and turn it over to someone else.

1) A give-and-take discussion that attempts to reach an agreement or settle a dispute. Negotiation is a form of alternative dispute resolution. 2) The transfer of a check, promissory note, bill of exchange, or other negotiable instrument to another in exchange for money, goods, services, or other benefit. (See also: negotiable instrument)

The amount of money or value remaining after all costs, taxes, depreciation of value, losses, and other expenses and deductions have been subtracted. The term is used in net profit, net income, net loss, net worth, and net estate.

Net Earnings
For an employee, earnings left after mandatory withholdings and deductions, such as state and federal income tax and Social Security contributions; sometimes referred to as take-home pay. For a business, earnings less expenses, taxes, and deductions

Net Estate
The value of all property owned at death less liabilities or debts.

Net Income
Gross income minus allowed business expenses.

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 landlords 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 limit 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.

Net Loss
See: net operating loss (NOL)

Net Operating Loss (NOL)
An annual net loss from a business operation. An NOL may be used to offset the income of unincorporated business owners from other sources of income in the year of the loss. An NOL may also be carried back two years to reduce tax liabilities or secure refunds of taxes. (See also: carryover)

New Matter
New facts raised in a pleading that go beyond just denying the allegations and present new issues.

New York Times V. Sullivan (1964)
The U.S. Supreme Court decision that prohibited public officials from suing news organizations for inaccuracies made by mistake. This ruling, based on the First Amendment guarantee of freedom of the press, made it more difficult for public officials to sue the press for libel, because they had to prove not only that the information was wrong, but that the news organization published it with malicious intent or reckless disregard for the truth.

Next Friend
A person, usually a relative, who appears in court on behalf of a minor or incompetent plaintiff, but who is not a party to the lawsuit. For example, children are often represented in court by their parents as next friends.

Next Of Kin
The closest relatives, as defined by state law, of a deceased person. Most states recognize the spouse or registered domestic partner and the nearest blood relatives as next of kin.

Latin for nothing.

Latin for nothing or zero.

Nisi Prius
The original lower level or trial court where a case was first heard by the judge and the jury, irrespective of where it is heard now. "Court of original jurisdiction" is often substituted for the term nisi prius which is Latin for "unless before."

No Child Left Behind Act Of 2001
An overhaul of the education system that requires states to establish challenging academic standards for all schools, to test students regularly to ensure they are meeting those standards, and to employ teachers who are highly qualified. Signed into law by President George W. Bush, NCLB uses a controversial system of incentives and penalties to achieve its goals.

No Contest
A criminal defendant's plea in court that the defendant will not contest the charge of a particular crime, also called "nolo contendere." While technically not an admission of guilt for commission of the crime, a plea of "no contest" will be treated for sentencing purposes by a judge as an admission of responsibility. A no contest plea is often made in cases in which there is also a possible lawsuit for damages by a person injured by the criminal conduct (such as reckless driving, assault with a deadly weapon, aggravated assault), because it cannot be used in the civil lawsuit as an admission of fault. (See also: nolo contendere)

No Fault
1) A type of divorce, now available in all states, in which neither party must prove that the other party is at fault in order to obtian a divorce. 2) A type of automobile insurance required of car owners by law in 19 states and the District of Columbia, in which the persons injured in an accident are paid only basic damages, limited to certain categories of actual harm, by the company that insured the vehicle in which they were riding or by which they were hit. 3) Popular shorthand for a no-fault insurance statute.

No-Contest Clause
A clause intended to keep a person from doing something or not doing something. In a will, a no-contest clause is intended to keep beneficiaries of the will from challenging its terms. Such clauses usually state that if a beneficiary challenges the will and loses, that beneficiary will receive nothing under the will. Under some states' laws, no-contest clauses are unenforceable. Also called in terrorem clause, noncontest clause, terrorem clause, anticontest clause, and forfeiture clause.

No-Fault Divorce
Any divorce in which the spouse who wants to end the marriage is not required to accuse the other of wrongdoing, but can simply state that the couple no longer gets along. Every state now has no-fault divorce. In the past, a party seeking a divorce had to prove that the other spouse was at fault for the marriage not working. No-fault divorces are usually granted for reasons such as incompatibility, irreconcilable differences, or irretrievable or irremediable breakdown of the marriage. Compare: fault divorce

No-Fault Insurance
Car insurance laws that require the insurance companies of each person in an accident to pay for medical bills and lost wages of their insured, up to a certain amount, regardless of who was at fault.

No-Par Stock
Shares in a corporation that are issued without a stated value per share. Compare: par-value stock

Nol. Pros.
See: nolle prosequi

Nolle Prosequi
(nol-ee pros-ee-kwee) Latin for "we shall no longer prosecute." At trial, this is an entry made on the record by a prosecutor in a criminal case or a plaintiff in a civil case stating that he will no longer pursue the matter. In a criminal case, the statement is an admission that the charges cannot be proved or that evidence has demonstrated either innocence or a fatal flaw in the prosecution's claim. An entry of nolle prosequi may be made at any time after charges are brought and before a verdict is returned or a plea entered. Most of the time, prosecutors need a judges permission to nol-pros a case.

Latin for "I choose not to." (See also: nolo contendere)

Nolo Contendere
(no-low-kon-ten-der-ee) See: no contest

Nominal Damages
A term used when a judge or jury finds in favor of one party to a lawsuit--often because a law requires them to do so--but concludes that no real harm was done and therefore awards a very small amount of money (for example, $1.00).

Nominal Party
A plaintiff or defendant in a lawsuit who may not have any actual interest or responsibility in a lawsuit but who is included because of technical reasons -- for example, an escrow company (temporarily holding title to property) may be named in a lawsuit over a real property sale. Without the nominal party, the court is unable to render the judgment to transfer the property. (See also: necessary party, party)

1) A person or entity who is requested or named to act for another, such as an agent or trustee. 2) A potential successor to another's rights under a contract. For example, in a real estate purchase agreement, Bob Smith might purchase the property but agree that ownership will be granted to "Bob Smith or nominee." 3) A person chosen by convention, petition, or primary election to be a candidate for public office.

Non Compos Mentis
(nahn calm-piss men-tiss) Latin for not master of one's own mind. Legally insane or not competent to manage one's own affairs or go to trial.

Non Sequitur
(non sek-wi-ter) Latin for "it does not follow." A term used to indicate that one statement does not logically follow from another.

See: noncompetition agreement

Noncompetition Agreement
An agreement where one party agrees not to compete with the other party for a specific period of time and within a particular area. Salespeople, for example, often sign noncompetition agreements that prevent them from using the contacts gained by one employer to benefit another employer, from selling within a particular area, or even working in the same type of business. Noncompetes are also used in the context of a contract for the sale of a business: The selling owner may agree not to compete with the acquiring business for a certain period of time. In some states, such as California, courts view noncompetition agreements with disfavor and will not enforce them against employees or contractors unless the restrictions are very narrow. In other states, courts routinely uphold them.

Nonconforming Use
The existing use (for example, residential, commercial, agricultural, light industrial) of a parcel of real estate that is now zoned for other kind of use Generally, a nonconforming use is permitted only if the use was legally established but now violates a zoning ordinance because the property was rezoned or the law was changed. For example, a corner parcel that has been used for a gasoline station for years might lie in an area now zoned for residential use only. The nonconforming use will be allowed ("grandfathered in"), but if the station were torn down or abandoned for a certain period of time, only residential use would be allowed going forward.

Noncontest Clause
See: no-contest clause

Noncontestability Clause
An insurance policy provision that requires an insurance company to challenge a statement made in an application for the insurance within a specific time. Thus an insurer cannot deny coverage on the basis of fraud or error if the insurer finds the allegedly fraudulent statement or error after that period of time has ended.

Used to describe two or more parcels of real property which are not connected.

Noncountable Resource
Property that is not considered to be a resource by the SSI and Medicaid programs for purposes of determining the owner's program eligibility.

Noncustodial Parent
A parent who does not have sole custody or primary custody of a child following divorce. Compare: custodial parent

Nondischargeable Debts
Debts that cannot be wiped out in bankruptcy, such as alimony, child support, and most income tax debts. If you file for Chapter 7 bankruptcy, you will still owe these debts when your case is over. If you file for Chapter 13 bankruptcy, you will have to pay your nondischargeable debts in full during your plan or continue to owe the remainder. Compare: dischargeable debts

Nondisclosure Agreement
A legally binding contract (also known as an NDA or confidentiality agreement) in which a person or business promises to treat specific information as a trade secret and not disclose it to others without proper authorization. Nondisclosure agreements are often used when a business discloses a trade secret to another person or business for such purposes as development, marketing, evaluation, or securing financial backing. A nondisclosure agreement will not protect trade secrets if the trade secret owner has not taken reasonable steps to keep the information secret.

Nondiscretionary Trust
A trust in which the trustee has no discretion about how to spend or invest trust funds. Also called a fixed trust.

Nondisparagement Clause
A provision in a contract requiring one or more parties to the agreement not to make negative statements about the other(s). A nondisparagement clause is often included in a settlement agreement that resolves a dispute.

Nonexempt Employee
Typically refers to an employee who is covered by overtime rules and other provisions of federal and state wage-and-hour laws.

Nonexempt Property
A debtor's property that can be taken by the trustee and sold for the benefit of the creditors in a Chapter 7 bankruptcy case, or can be seized by creditors if they win a judgment against the debtor. Compare: exempt property

The failure to act when a duty to act existed. Compare: misfeasance, malfeasance

People who come to the United States temporarily, with a nonimmigrant visa, for some particular purpose. A nonimmigrant must depart the U.S. within a designated length of time, and in most cases may not act with the intention of remaining in the U.S. permanently. There are many types of nonimmigrants. Students, temporary workers, and visitors are some of the most common.

Nonimmigrant Visa
A U.S. visa, issued by a U.S. consulate or embassy, that allows its holder to come to the United States temporarily and for a limited purpose. Each nonimmigrant visa comes with a different set of privileges, such as the right to work or study. In addition to a descriptive name, a letter of the alphabet and a number identifies each type of nonimmigrant visa. Student visas, for example, are F-1 or M-1, and investor visas are E-2. Nonimmigrant visas also vary according to how long they permit the holder to stay in the United States. For example, someone on an investor visa can remain for many years, but someone on a visitor's visa can stay for only six months at a time.

Nonjudicial Foreclosure
Foreclosure that proceeds outside of court, under a power of sale clause in a deed of trust.

Nonlapse Statute
See: antilapse statute

A requirement for patent protection. A new invention must produce unexpected or surprising new results that are not anticipated by the existing technology (or prior art). A nonobvious invention is unexpected by a person with ordinary skill in the art -- for example, the telephone technology created by Alexander Graham Bell was not obvious to audio and sound engineers of Bell's day. (See also: prior art)

Nonprobate Assets
Assets left by a deceased person that do not go through probate court proceedings before being transferred to those who inherit them. Common examples are life insurance proceeds, property held in joint tenancy, community property, and property held in a living trust.

Nonprobate Estate
See: nonprobate assets

Nonprobate Transfer
The distribution of a deceased person's property by any means other than probate. Many types of property pass free of probate, including (in some states) property left to a surviving spouse and property left outside of a will through probate-avoidance methods such as pay-on-death designations, joint tenancy ownership, living trusts, and life insurance. Property that avoids probate is sometimes described as the nonprobate estate.

Nonprofit Corporation
An organization incorporated under state laws and approved by both the state's secretary of state and its taxing authority as operating for educational, charitable, social, religious, civic, or humanitarian purposes. Some nonprofit corporations qualify for a federal tax exemption under Section 501(c)(3) of the Internal Revenue Code, which makes them eligible for certain federal and state tax exemptions and the contributions they receive are tax deductible by the donors.

Nonrecourse Loan
A secured loan that permits the lender to collect only out of the collateral pledged by the debtor, and not out of the debtor

Nonrecurring Closing Costs
Those costs of closing a home purchase that need to be paid only once -- such as the appraisal fee, title insurance, and transfer taxes. (Compare with recurring closing costs)

Nonsolicitation Agreement
An agreement that restricts an ex-employees ability to solicit clients or employees of the ex-employer.

A court's dismissal of case because the plaintiff does not provide sufficient evidence or make an adequate legal showing for the judge to rule in the plaintiff's favor.

Nontransferable Ticket
An airline ticket that can be used only by the passenger whose name appears on the ticket. All airlines require passengers to show ID when they check in, and an airline can confiscate a ticket if the names on the ID and on the ticket don't match.

Norris V. Alabama (1935)
A U.S. Supreme Court decision that overturned "the Scottsboro case," in which several black men were falsely charged with raping a white woman. The Court held that organized exclusion of blacks from jury panels (the pool of potential jurors) was a violation of a defendants' constitutional right to due process.

Not Guilty
A plea entered by a defendant in a criminal case. Often erroneously confused with a claim of innocence, technically a plea of not guilty simply compels the prosecution to prove every element of the offense beyond a reasonable doubt. When the jury (or a judge sitting without a jury) acquits a defendant after trial, they return a verdict of "not guilty," which indicates their conclusion that the prosecution did not meet its burden of proving guilt beyond a reasonable doubt. (See also: reasonable doubt)

Not Guilty By Reason Of Insanity
A plea entered by a defendant in a criminal trial, in which the defendant claims that he or she was so mentally disturbed or incapacitated at the time of the offense that he could not have intended to commit the crime. A jury that agrees with this plea may find the defendant not guilty by reason of insanity, but usually the defendant faces civil commitment proceedings if the defendant is judged to be dangerous in a subsequent hearing. (See also: insanity defense)

Certification by a notary public to establish the authenticity of a signature on a legal document. Many legal documents, such as deeds and powers of attorney, must be notarized.

See: notary public

Notary Public
A licensed public officer who administers oaths, certifies documents, and performs other specified functions. Notaries public are usually licensed through the Secretary of State's office in the state where the notary lives. A notary public's signature and seal is required to authenticate the signatures on many legal documents.

See: promissory note

Information that one person gives to another, alerting the other party of the first party's intentions. Notice of a lawsuit or petition for a court order begins with personal service on the defendants (delivery of notice to the person) of the complaint or petition, together with a summons or order to appear (or file an answer) in court. In a noncourt setting, notice can simply be a written statement of intentions, as when a landlord terminates a tenancy by serving a termination notice on the tenant.

Notice Of Default
A statement, usually written, from one party to a contract to another, advising the recipient that he or she has failed to live up to a term or condition of the contract. Although defaults are most common in real estate, they can happen in any contract situation. A notice of default can result when a homeowner fails to pay as required under his mortgage or deed of trust. In a lease situation, a notice of default can be sent by either the landlord or tenant, claiming that one of them has violated a condition of the lease. If the defaulting party fails to correct, or cure, the default, the other side may declare the contract to be over, by instituting foreclosure proceedings, an eviction, or taking any other act, depending on the nature of the contract, that ends the contractual relationship.

Notice Of Deficiency
See: 90-day letter

Notice Of Tax Lien
See: tax lien notice

Notice To Quit
A legal termination notice that a landlord gives a tenant to leave (quit) the premises or to pay overdue rent or correct (cure) some other lease violation, such as bringing in an unauthorized pet or roommate, within a short time (such as three days). State rules specify details of these notices, such as how and when they may be used, the amount of time the tenant has to leave (and whether the tenant has the chance to correct or cure the violation), the delivery and timing of the notice, and what steps a landlord must take before filing an unlawful detainer or eviction lawsuit.

Notorious Possession
Possession or control of property that can be observed by others -- not a hidden or secret possession. For example, if neighbors can see that a person is living in and taking care of a house, it can be said that the person has notorious possession of it.

NOV (Non Obstante Veredicto)
Shorthand acronym for the phrase non obstante veredicto (nahn ahb-stan-teh very-dick-toe), meaning "notwithstanding the verdict," referring to a decision of a judge to set aside a jury's decision when the judge is convinced the verdict is not reasonably supported by the facts or the law. The result is called a "judgment NOV."

The voluntary substitution of a new contract for an old one, usually to change the parties, duties, or payment terms.

A requirement for obtaining a patent. To be novel, all material elements of an invention cannot have been disclosed in any previous technology or publication (prior art). Compare: anticipation

Harmful to health; often refers to nuisances such as fumes or smoke.

Of no force or effect; invalid. Example: a statute that is unconstitutional is a nugatory law.

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. Lawsuits may be brought to abate (remove or reduce) a nuisance. (See also: quiet enjoyment, attractive nuisance)

Nuisance Fees
Fees charged by a credit card company or bank for using (or failing to use) its services in particular ways, such as inactivity fees, fees for not carrying a balance on a credit card, or fees for using an ATM or a teller. Sometimes used to refer to any fee a company charges that is disproportionate to the actual cost of the service provided or the activity being penalized, such as a $100 fee to change an airline seat or a $500 fee to have real estate documents notarized when purchasing a house.

Nulla Bona
(nuh-lah bo-nah) Latin for "no goods." If a sheriff tries to enforce a writ of execution but can't find any property in the jurisdiction that can be seized to satisfy the judgment, the sheriff returns the writ nulla bona.

Something which may be treated as nothing, as if it did not exist or never happened. This can occur by court ruling or enactment of a statute. The most common example is a nullity of a marriage by a court judgment. (See also: annulment)

Nunc Pro Tunc
(nunk proh tuhnk) Latin for "now for then," meaning to cause an order or judgment to apply to an earlier date. Example: A divorce judgment is submitted to the court but, because of a mistake of the court clerk, not filed or signed by the judge. Six months later, one of the parties marries someone else. When the parties later discover the divorce was never entered, they can obtain a judgment nunc pro tunc making the judgment final as of the date they filed it, so that the remarriage is not bigamous.

Nuncupative Will
An oral will, which is legal only in some states and in very unusual circumstances, such as when the person making the will faced imminent death.