Among the following highest-and-best-use criteria, which screens whether a proposed use is allowed under applicable restrictions, before selecting among financially feasible alternatives?
Correct Answer
D) Whether the use is legally permissible
Legal permissibility is an initial screen alongside physical possibility; feasibility and maximal productivity are then assessed among viable uses. The exact order of legal and physical investigation can vary. A proposed change in zoning requires support for reasonable probability rather than assuming present illegality permanently resolves all HBU analysis.
Why This Is the Correct Answer
Option D is correct because legal permissibility is the criterion that asks whether a proposed use is allowed under applicable restrictions such as zoning. It is applied as an early screen, together with physical possibility, before financially feasible alternatives are compared. Uses that are not legally permissible are set aside unless a change in restrictions is reasonably probable.
Why the Other Options Are Wrong
Option A: Whether the use is maximally productive
Option A, whether the use is maximally productive, is the final test that selects among feasible uses. It does not screen whether a use is allowed under restrictions.
Option B: Whether the use is financially feasible
Option B, whether the use is financially feasible, tests whether a use can produce an adequate return. It is applied after the legal and physical screens, not as the restriction screen.
Option C: Whether the use returns the most income
Option C, whether the use returns the most income, describes the idea behind maximal productivity. It does not address whether the use is allowed under applicable restrictions.
Allowed before profitable
First ask whether a use is allowed and possible; only then ask whether it pays and which pays most.
How to use: Use this to place each highest and best use criterion in its proper role.
Exam Tip
A question about zoning, deed restrictions or other limits on use points to legal permissibility.
Common Mistakes to Avoid
- -Confusing legal permissibility with financial feasibility
- -Testing maximal productivity before screening out prohibited uses
- -Assuming a hoped-for rezoning without support for its probability
Concept Deep Dive
Analysis
This question tests the role of each highest and best use criterion. Legal permissibility asks whether a use is allowed under zoning and other restrictions, and it acts as an initial screen along with physical possibility. Financial feasibility and maximal productivity are then tested among the uses that pass those screens.
Background Knowledge
Highest and best use is the legally permissible, physically possible, financially feasible and maximally productive use. Legal and physical tests narrow the possible uses, and the economic tests then identify the most productive one. A proposed zoning change requires support for its reasonable probability.
Real-World Application
An appraiser analyzing a vacant parcel zoned for single-family use considers a buyer's idea for apartments. Because apartments are not permitted and no rezoning is reasonably probable, the appraiser screens that use out before testing the feasibility of permitted uses.
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Previous Question
Three recent vacant-land sales of similar highest-and-best-use acreage closed at: Comp A $1,050,000 for 12.0 acres; Comp B $960,000 for 10.0 acres; Comp C $1,250,000 for 12.5 acres. The subject is 8.0 acres and is otherwise comparable after unit-price reconciliation. Per standard appraisal guidance sales-comparison land valuation using $/acre, what indicated land value results after taking the arithmetic mean of the three $/acre unit prices and applying it to the subject?
Next Question
How do highest and best use as though vacant and highest and best use as improved differ?