Which is an example of curable functional obsolescence?

Curable functional obsolescence refers to a property's deficiency that can be corrected or improved upon, thus enhancing its overall value and functionality. In the context of the options provided, inadequate hot water systems represent an example of curable functional obsolescence because it is a specific deficiency that can typically be remedied through repair or replacement. This type of functional inadequacy directly affects the usability and appeal of the property, and addressing it often results in a measurable increase in the property's value.

When evaluating the other choices, while poor room arrangement is a functional issue as well, it may not always be considered curable in the same straightforward manner as a mechanical system. Changing a room arrangement often involves significant structural alterations which may not be financially viable or practical. High ceilings, generally considered a desirable feature, are not associated with functional obsolescence; rather, they enhance a property's appeal. Extravagant foundation walls, while potentially excessive, may also fall outside the curable category since they don’t directly impair functionality and would likely require extensive work to rectify. Thus, the inadequacy of hot water systems stands out as a clear and actionable example of curable functional obsolescence.