New Zealand Law Society - Reduce the risks with a LIM

Reduce the risks with a LIM

A Land Information Memorandum (LIM) provides information held by a local authority on a property (Council). While not essential, it is advisable to obtain a LIM in relation to any property you are interested in purchasing — after all, it is likely to be your most significant asset.

A LIM might include information about things such as:

  • potential erosion;
  • contamination or flooding;
  • structural requirements;
  • where the street water pipes and sewerage run;
  • rates details;
  • consents and notices that have been issued relating to this or neighbouring properties;
  • the zoning (which tells you what you can do with the land);
  • likely future use such as new roads, information from other utility providers; and
  • any other information the local authority regards as relevant.

Alterations or additions to a property

A LIM report can be particularly important if you want to carry out alterations or additions to the property or to subdivide the property. It might also alert you to an illegally installed solid fuel burner. Even if it was correctly installed, if there was no permit (now called a consent) obtained, the house insurance is likely to be invalidated if the burner causes a fire.

A LIM will also inform you if a compliance certificate been issued for existing alterations or construction work.

A LIM may show areas prone to flooding or zones where heavy rain may pond. A property may be listed for sale during dry weather, when these issues would not otherwise be noticeable to you.

A LIM may also provide early warning of road widening or proposed new arterial routes likely to be built near the property, which may affect its future value.

You should always compare the information on the LIM with what is physically at the property. For instance, if there is a recent carport or other structure on the property but no reference on the LIM to a consent being issued for it, you should discuss this with your property lawyer.

If you are borrowing money to purchase the property, your lender will often require you to obtain a LIM and (depending on the information contained in the report) may impose new terms and conditions on the loan. This could result in additional expenses.

Minimal outlay for maximum peace of mind

Although a LIM seems expensive (especially when there is no guarantee you will purchase the property) when compared to the risks of not getting a LIM, the cost is minimal.

It is up to you, not your property lawyer, to order the LIM report and read its contents. If you require assistance in understanding the content of the LIM you have ordered, you may need to contact your property lawyer with a specific request to check the LIM for any legal issues, which should be within the scope of their professional abilities.

In general terms it is possible for a lawyer to check the LIM report and advise on any legal issues that may arise in the document.  For instance, your property lawyer may look over the LIM and raise items of concern, such as where no compliance certificate has been issued, but remember property lawyers are not qualified to give advice on building issues or town planning matters, for example.

If any problems are discovered and your sale and purchase agreement is subject to your approval of the LIM, you can request that the unsatisfactory aspects of the LIM are remedied (if possible) or possibly cancel the contract. Your property lawyer will be able to advise you on your legal options if you are concerned with the content of the LIM report.

A word of warning — A LIM does not contain all information relating to properties. For instance, a LIM will not verify survey measurements and it also possibly may not contain contamination reports held by regional councils. The onus is on you as a purchaser to seek expert reports where these are required.