What does the term 'Functional - Curable' refer to?

The term 'Functional - Curable' refers to a type of accrued depreciation in the context of property valuation. It describes a situation where physical or functional obsolescence is present in an asset, but it can be alleviated or fixed through relatively straightforward maintenance or upgrades.

For example, a property might have outdated systems or features that make it less functional or desirable, such as an old HVAC system. If the owner can replace or upgrade this system at a reasonable cost, the depreciation attributed to these functional issues can be considered 'curable.' This concept is particularly important in real estate appraisal and management because it helps assess the potential value that can be restored to the property through investment. Understanding the 'Functional - Curable' category aids appraisers in determining how much value to attribute to necessary improvements when evaluating a property.

The other choices do not relate to the concept of 'Functional - Curable' in the context of real estate valuation, as they pertain to different aspects such as tax assessments, operating expenses, or equity measurements, which are not directly tied to property depreciation or restoration of functionality.