Lim Reports - Why You Need One
What is a LIM report, and why should you always order one before purchasing a residential property?
Amongst other recommendations, property lawyers will always urge a purchaser to include three key conditions within a sale and purchase agreement:
- "Subject to finance" clause
- Building inspection
- LIM report
Let's take a closer look at one of these: the LIM (land information management) report.
This official document, produced by the local council about a residential property, summarises all the information that the local council holds on that property. For Auckland Council, this could include:
- Private and public stormwater and sewage drains
- Rates costs and whether any rates are overdue
- Building, plumbing and drainage
- Resource consent
- Planning consents (including any abatement orders or requisitions affecting the land or any building on the land)
- Special conditions, such as New Zealand Historic Places, trust listings, and/or interests held by local iwi
- Network utility in relation to the Building Act 1991 or 2004 (i.e., the location of certain network utilities, such as telecoms or water, as this relates to the property)
More recently, some LIM reports include notations about potential erosion, slippage, flooding, the presence of hazardous substances, and whether the property has ever been "red stickered" due to a rapid building assessment following a state of emergency.
It should be noted that a LIM report doesn't really cover anything about the condition of a property, only what is known about that property from a council perspective.
You can order a LIM report from your local council. Auckland Council offers a standard delivery service of up to 10 working days or an urgent service of up to three working days. To learn more about costs and timeframes, go to the Auckland Council website.
Why should a LIM Report always be included in a Sale and Purchase Agreement?
Our specialist property law team considers a LIM report crucial to a property purchaser's due diligence. There are sound reasons why a LIM Report is included in the Auckland District Law Society format sale and purchase agreement.
We always recommend that our clients obtain a LIM report that is up-to-date and accurate for the date they intend to purchase the property. A LIM report that is six months could be useless and obsolete if more recent decisions have been taken. For example, an abatement notice may have been served for unconsented works. This revelation might mean that the property is not suitable for a purchaser intending to live there following settlement. It would also mean that a vendor was in breach of warranties under the sale and purchase agreement.
Furthermore, there have, unfortunately, been cases where unscrupulous vendors or agents have been accused of doctoring LIM reports to conceal details that might negatively impact a future sale. The NZ Herald wrote about one such case in 2021/22.
Before embarking on any kind of property purchase, make sure you understand exactly what the deal entails and what the LIM report means. The Turner Hopkins property law team can provide proven, trustworthy advice, and you can rely on us to be staunchly in your corner. To speak to one of our specialists, call (09) 486 2169 or contact us.