A report states a value 'subject to completion per plans and specifications.' A reader should understand that:
Correct Answer
C) The value assumes work not yet performed has been completed
Why this is correct: The value assumes work not yet performed has been completed. The phrase 'subject to' signals a hypothetical condition—the appraiser is valuing the property as if the described future work is already complete, which is different from its current 'as-is' state. Why the other choices are wrong: The value applies to the property as it physically exists today describes an 'as-is' appraisal. The appraiser has inspected the finished improvements cannot be true if work is not complete. The lender has approved the construction budget may be true but is not what the 'subject to' statement conveys. Exam tip: 'Subject to' indicates a hypothetical condition about future completion.
Why This Is the Correct Answer
Why this is correct: The value assumes work not yet performed has been completed. The phrase 'subject to' signals a hypothetical condition—the appraiser is valuing the property as if the described future work is already complete, which is different from its current 'as-is' state. Why the other choices are wrong: The value applies to the property as it physically exists today describes an 'as-is' appraisal. The appraiser has inspected the finished improvements cannot be true if work is not complete. The lender has approved the construction budget may be true but is not what the 'subject to' statement conveys. Exam tip: 'Subject to' indicates a hypothetical condition about future completion.
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