The Highest and Best Use
The highest and best use of a property is a concept in appraisal, which is one of the most important in real estate. It states that the value of a property is directly related to the use of that property. The highest and best use, also known as The H&B Use, “is the probable use that produces the highest property value.” (pg. 256) This use may or may not be the current use of the property. In order to be considered as the Highest and Best Use of a property, any potential use must pass a series of tests. The use must be legally allowable, physically possible, reasonably probable, and financially feasible.
The legally allowable uses are the potential highest and best uses. This may exclude uses that are not allowed by zoning. Also uses that are forbidden by government regulations along with the uses prohibited by deed restrictions or covenants are not premised as well. Properties with a use that predates existing zoning regulations may be legal due to the fact that it was in a legal zone in the past. These situations consider these properties to be “grandfathered in”. Such grandfathered uses are generally legal even though they do not meet current zoning regulations since their use predates the zoning. However, some uses in cases like this may not be reproduced if the legally nonconforming improvement is destroyed or damaged beyond a certain point. Another use is the physically possible use.
The reasonably *p*robable use is a use that one should not look to far in the future when dealing with property because anything can change. The dilemma is that there is no set time period for what is too far. Even though some professionals feel that anything past two or three years is too far, anything can happen at any time.
The property rights of women during most of the nineteenth century were dependent upon their marital status. Once women married, their property rights were governed by English common law, which required that the property women took into a marriage, or acquired subsequently, be legally absorbed by their husbands. Furthermore, married women could not make wills or dispose of any property without ...
The highest and best use of a property must be financially feasible as well. Financial feasibility is based on supply and demand because the proposed use of a property must generate adequate revenue to justify the costs of construction plus a profit for the developer. It is vital in finding out who the competition is and who are the potential buyers, tenants and customers by doing some research that will lead to how financially feasible a property or land may potentially be. When investing in a property, maximum profitability is sought, but may not be achieved if the financially feasible is not used.