California Real Estate Practice Exam

An investigation reveals serious deterioration of the foundation and supporting beams in a building. How would an appraiser classify this type of defect?

1. Curable functional obsolescence

2. Curable physical deterioration

3. Incurable functional obsolescence

4. Incurable physical deterioration

The correct answer is: Curable functional obsolescence

The correct classification of serious deterioration of the foundation and supporting beams in a building would be incurable physical deterioration. This type of defect refers to damage that cannot effectively be repaired or that would be too costly to remedy compared to the value it adds to the property. In this scenario, the integrity of the foundation and supporting structures is crucial for safety and structural soundness. Curable physical deterioration would apply to issues that can be easily fixed and are typically lower in cost, like minor repairs to the roof or interior elements that have weathered. Curable functional obsolescence refers to a property feature that is outdated but can be remedied — for example, installing modern fixtures in an old kitchen. On the other hand, incurable functional obsolescence refers to a permanent characteristic of a property that negatively affects its value and cannot be easily changed or updated, such as a home located in a less desirable area. Therefore, recognizing the serious structural issues involved in this case leads to the conclusion of incurable physical deterioration being the correct classification.