Valuation and Financing Practice Question

Question

A listing agent notices a potential compliance issue involving depreciation. Which statement is the most accurate exam answer? (Item 47)

Answer choices

1. A. It prevents any later disclosure, even when new facts become known.
2. B. It applies only to commercial property and never to residential transactions.
3. C. Distinguish physical deterioration, functional obsolescence, and external obsolescence.
4. D. It is controlled only by local custom rather than by law, contract, or professional duty.

Correct Answer

C. Distinguish physical deterioration, functional obsolescence, and external obsolescence.

Explanation

The correct answer is C because depreciation requires candidates to distinguish physical deterioration, functional obsolescence, and external obsolescence. The other options overstate the effect of custom, oral agreement, escrow, or independent salesperson action and do not reflect safe California exam practice.

Question details

• Difficulty: medium
• Domain: Valuation and Financing
• Objective: depreciation

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