Risk Assessment & Mitigation Flashcards
7 cards from real ARA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Risk Assessment & Mitigation flashcards as text
A rural property has underground storage tanks (USTs) with no evidence of leakage. How should the appraiser treat this in the report?
Answer: Disclose the presence of USTs as a recognized environmental condition and note potential liability risk
USTs represent a recognized environmental condition even without confirmed leaks, and the appraiser must disclose their existence and the associated potential liability.
Which type of soil contamination risk most commonly arises from long-term application of biosolids (sewage sludge) on agricultural land?
Answer: Accumulation of heavy metals and PFAS compounds that can restrict future land use
Long-term biosolid application can concentrate heavy metals and PFAS ('forever chemicals') in soil, potentially triggering regulatory restrictions on food-crop production.
When performing a rural appraisal, the appraiser discovers that the property's well water exceeds EPA action levels for nitrates. This finding most directly represents:
Answer: An environmental risk requiring disclosure and potential remediation cost estimation
Nitrate contamination exceeding EPA limits creates a health hazard, remediation liability, and marketability risk that must be disclosed and addressed in the appraisal.
A rural timberland property is subject to bark beetle infestation across 30% of its standing timber. Which appraisal approach best captures this risk?
Answer: Income approach using probability-adjusted timber yield forecasts reflecting mortality risk
Infested timber has reduced yield and accelerated salvage-harvest pressure; the income approach should incorporate mortality probability to reflect the reduced productive capacity.
Which mitigation strategy is most commonly recommended when rural farmland is found to contain wetlands that restrict development?
Answer: Quantify the restricted acreage separately and analyze paired sales of properties with similar wetland ratios
Proper appraisal practice calls for segregating wetland from upland acreage and using market-derived adjustments from comparable properties with similar constraints.
A rural property's access relies on a prescriptive easement rather than a recorded right-of-way. The primary risk this creates is:
Answer: Legal uncertainty — the easement could be challenged, extinguished, or disputed, impairing marketability
Prescriptive easements lack the legal certainty of recorded access rights and can be challenged, creating title risk that lenders and buyers typically view negatively.
In rural appraisal, 'functional obsolescence' related to risk mitigation most commonly occurs when:
Answer: Farm improvements are over-built or designed for a single commodity that no longer dominates the market
Single-commodity specialized improvements lose functional utility when market conditions shift, and the excess cost over market-supported value constitutes functional obsolescence.