Exam 1 Chapters 17 & 18

Question 1

What are the Four Tests of Highest and Best Use?

Answer 1

• Physically Possible
• Legally Permissible
• Financially Feasible
• Maximally Productive

These tests help determine the most appropriate use of a property.

Question 2

What are the two separate analyses of Highest and Best Use? (Regarding site condition)

Answer 2

1. Highest and best use of the site as though vacant
2. Highest and best use of the property as improved

Each analysis focuses on different aspects of the property’s potential.

Question 3

What does the term ‘As Vacant’ signify in Highest and Best Use analysis?

Answer 3

Assumes land is vacant and available, indicating a change in the near future

This analysis helps identify property use to estimate land value and proper comparable land sales.

Question 4

What factors contribute to the ‘Physically Possible’ test?

Answer 4

Site
* Size
* Shape
* Topography
* Access
* Utilities (availability)
* Soil Stability
Improvements (if improved with a building(s))
* Size
* Construction/Design
* Condition
* Cost of Renovation

These factors assess whether a proposed use can physically occur on the site.

Question 5

What are the elements of the ‘Legally Permissible’ test?

Answer 5

• Zoning
• Private restrictions
• Building codes
• Historic districts
• Environmental regulations
• Long-term leases

This test evaluates the legal framework governing property use.

Question 6

What does ‘Financially Feasible’ mean in the context of Highest and Best Use?

Answer 6

This analysis assesses the financial viability of potential property uses.

Question 7

Define ‘Maximally Productive’ in the context of property use.

Answer 7

Of all choices, which use provides the highest return? The Ideal use.

This identifies the most profitable use of the property.

Question 8

What is meant by ‘Interim Use’ in property analysis?

Answer 8

A temporary use of a property while waiting for a more profitable use to be realized

This might involve utilizing existing structures until a buyer is found.

Question 9

What are the motivations of probable purchasers in property analysis?

Answer 9

• Owner Occupancy (personal use)
• Investment (cash flow)
• Speculation (appreciation)

Understanding these motivations can influence the highest and best use determination.

Question 10

Fill in the blank: The highest and best use of a property as improved analyzes the current use and compares it to the _______.

Answer 10

[ideal use]

This comparison helps assess if current improvements should be modified or replaced.

Question 11

In the context of an existing service station, what is the highest and best use as if vacant?

Answer 11

Commercial Development

This is based on the property’s physical and legal characteristics, as well as market demand.

Question 12

What is the role of deed restrictions in property use analysis?

Answer 12

They limit the property use to specific types, such as single-family residential use

Analyzing if these restrictions can be removed or modified is crucial for determining highest and best use.

Question 13

How should you analyze the highest and best use of a commercial lot improved with a plumbing shop?

Answer 13

Consider the current lease, property value, and potential for redevelopment

This includes evaluating whether the existing use aligns with the property’s highest and best use.

Question 14

Give an example of Legally Non-Conforming use

Answer 14

e.g. a duplex built prior to current zoning that now only allows for single family uses

Question 15

What does Excess or Surplus land mean?

Answer 15

e.g. the land could be legally subdivided from the rest of the property to create a legal, independent, economic unit