A finished basement is space that meets certain standards of completion. A finished basement has underlayment and flooring installed. Interior walls have been framed, insulated, drywalled, trimmed and painted.
Before a basement can be properly finished, any issues related to moisture penetration through the basement walls or floor must be addressed. Moisture can damage many finishes such as flooring, insulation, drywall and paint. Moisture is also responsible for mold and mildew.
Any electrical, plumbing or air-conditioning services must be enclosed behind the finished walls or located in a separate unfinished space, behind a fire-rated door. Headroom in finished basements is often limited because services for the upstairs living space cannot be compromised.