GameObject terrainGO = new GameObject("My Terrain");

Terrain terrain = (Terrain) terrainGO.AddComponent(typeof(Terrain));
TerrainData terrainData = new TerrainData();
terrain.terrainData = terrainData;

Instantiate(terrainGO);

// error:
/*
NullReferenceException: Object reference not set to an instance of an object
UnityEngineInternal.TerrainRenderer.RecursiveCalculateLod (UnityEngineInternal.QuadTreeNode node)   (at C:\builds\unity-trunk\unity\Runtime\Export\Terrain\TerrainRenderer.cs:446)
UnityEngineInternal.TerrainRenderer.RenderStep1 (UnityEngine.Camera camera, TerrainLighting renderMode, Int32 maxLodLevel, Single tau, Single splatDistance, Int32 layer)   (at C:\builds\unity-trunk\unity\Runtime\Export\Terrain\TerrainRenderer.cs:323)
UnityEngine.Terrain.CullAllTerrains ()   (at C:\builds\unity-trunk\unity\Runtime\Export\Generated\Terrains.cs:517)
UnityEditor.Handles:Internal_DrawCamera(Camera, Int32)
UnityEditor.Handles:Internal_DrawCamera(Camera, Int32)
UnityEditor.Handles:DrawCamera(Rect, Camera, Int32) (at C:\builds\unity-trunk\unity\Editor\Mono\Generated\EditorHandles.cs:731)
UnityEditor.SceneView:OnGUI() (at C:\builds\unity-trunk\unity\Editor\Mono\SceneView\SceneView.cs:350)
System.Reflection.MonoMethod:InternalInvoke(Object, Object[])
System.Reflection.MonoMethod:InternalInvoke(Object, Object[])
System.Reflection.MonoMethod:Invoke(Object, BindingFlags, Binder, Object[], CultureInfo)
System.Reflection.MethodBase:Invoke(Object, Object[])
UnityEditor.HostView:Invoke(String) (at C:\builds\unity-trunk\unity\Editor\Mono\GUI\DockArea.cs:156)
UnityEditor.DockArea:OnGUI() (at C:\builds\unity-trunk\unity\Editor\Mono\GUI\DockArea.cs:491)
*/