Which highest-and-best-use criterion addresses whether a proposed use is allowed by zoning and applicable legal restrictions?
Correct Answer
D) Legally permissible
Legal permissibility evaluates zoning, deed restrictions and other applicable legal constraints. Physical possibility addresses site capabilities. These initial screens may be investigated together; financial feasibility and maximal productivity then assess supported viable alternatives.
Why This Is the Correct Answer
Option D is correct because the legally permissible test asks whether a use is currently allowed or most probably allowable under applicable laws and regulations, including zoning and deed restrictions. A property should not be appraised on the basis of an illegal use, so this test screens out uses that the law would not allow.
Why the Other Options Are Wrong
Option A: Maximally productive
Option A, maximally productive, is the final test that identifies which feasible use produces the highest value. It does not address whether a use is allowed by zoning.
Option B: Physically possible
Option B, physically possible, addresses the site's size, shape, soils, topography and similar physical capabilities, not legal restrictions such as zoning.
Option C: Financially feasible
Option C, financially feasible, asks whether a use produces a positive return after expenses and capital recovery. It concerns economics, not legal permission.
Legal, Physical, Financial, Maximal
Remember the order with 'Lawyers Prefer Fancy Martinis': Legally permissible, Physically possible, Financially feasible, Maximally productive.
How to use: Use the phrase to recall the four tests and match each issue to its test.
Exam Tip
Zoning, deed restrictions, building codes and similar laws point to legally permissible; site characteristics point to physically possible.
Common Mistakes to Avoid
- -Confusing legal restrictions with physical limitations
- -Treating financial feasibility as the test for zoning compliance
- -Ignoring a reasonable probability of a zoning change
Concept Deep Dive
Analysis
This question tests knowledge of the four highest-and-best-use criteria and what each one addresses. Zoning, deed restrictions and other legal constraints fall under the legally permissible test. Match the stated concern, legal restrictions, to the criterion that screens for it.
Background Knowledge
Highest and best use is analyzed through four tests: legally permissible, physically possible, financially feasible and maximally productive. The legal and physical tests are initial screens and may be investigated together; the financial tests then compare the viable alternatives.
Real-World Application
An appraiser considering a multifamily use for a parcel zoned single-family checks whether a rezoning is reasonably probable. Without that probability, the multifamily use fails the legally permissible test.
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