Legal Definitions - functional obsolescence

Definition: Functional obsolescence is when a property becomes less useful or valuable due to inherent deficiencies in its design or equipment, or due to improvements in the property since its use began.

For example, a house built in the 1950s may have a small kitchen and outdated appliances, making it less desirable to buyers who want a modern, spacious kitchen with new appliances. This is an example of functional obsolescence due to inadequate equipment or design.

Another example is a computer that was top-of-the-line when it was purchased a few years ago, but now cannot run the latest software or games. This is an example of functional obsolescence due to improvements in technology since its use began.

Functional obsolescence can decrease the value of a property and make it less desirable to buyers or tenants. It is different from physical deterioration, which is caused by wear and tear over time.