California Real Estate Practice Exam

What kind of replacement would be classified as functional obsolescence?

1. A new roof

2. Energizing an outdated building's wiring system

3. Fixing a leaking faucet

4. Renovating the foundation

The correct answer is: A new roof

Functional obsolescence refers to a reduction in the value of a property due to outdated features or designs that do not meet current market demands or standards. This could include aspects such as inefficient layouts, outdated technology, or systems that are no longer practical or desirable. In this context, the choice of a new roof does not align with the definition of functional obsolescence, as it is a necessary maintenance upgrade rather than a feature related to market preference or function. A new roof improves the property and can be seen as an enhancement in functionality, ensuring it remains appealing and serviceable. Energizing an outdated building's wiring system speaks more to updating functionality to meet modern standards and thus is more about restoring utility rather than addressing functional obsolescence. Fixing a leaking faucet is purely a maintenance issue, and renovating the foundation focuses on the structural integrity of the property, rather than addressing how the features of the property may be outdated or undesirable in current housing markets. Therefore, the correct interpretation of functional obsolescence must consider items that fail to meet updated standards or expectations of current usage, which would apply better to different contexts than the choices provided.