California Real Estate Practice Exam

A property located near a sewage treatment plant would likely suffer from what?

1. Physical deterioration

2. Functional obsolescence

3. External obsolescence incurable

4. All of the above

The correct answer is: External obsolescence incurable

The correct answer to the question is that a property located near a sewage treatment plant would likely suffer from external obsolescence, which is often considered incurable. This type of obsolescence occurs when external factors negatively impact a property’s value, and in this case, proximity to a sewage treatment plant can lead to odors, noise, and potential health concerns, thus making the property less desirable to potential buyers. Properties near unpleasant facilities like sewage plants are typically viewed as less favorable, which reflects negatively in their market value, even if the physical structure of the property is in good condition. This external influence is not something the property owner can change (hence "incurable"), distinguishing it from other forms of obsolescence that can be addressed through renovations or improvements. The other options, while they may relate to some extent, do not specifically capture the unique impact of being close to a sewage treatment facility. Physical deterioration refers to the wear and tear on a property itself, while functional obsolescence concerns issues within the property that may make it less useful or desirable. However, the primary concern in this context is really the external, unchangeable factors negatively affecting the property’s value.