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Buying Land - The Value Of A Lim Report

15 February 2012

It is a common misconception that you don’t need a LIM report when you buy bare land, or when the house and buildings have been signed off by Council. However, the value of a LIM report goes much further than that.

Your lawyer will be able to search the title to the land for you and tell you what restrictions are recorded on the title. For example, the land could be subject to easements or building restrictions. However, the title search will not give you all the information you might need about the land or the restrictions on its use.

 

What is a LIM Report?

A LIM report is a “Land Information Memorandum”. It is provided by the local authority and contains information the local authority holds on the property. The contents of the LIM vary between Councils, but may include details of the following:

  • Features of the land such as erosion, flooding, subsidence or the presence of hazardous substances
  • Storm water and sewage drains
  • Water supplies
  • Rates and valuation details
  • Building information – building plans, consents and certificates and leaky home notifications
  • Restrictions on the use of the land or buildings
  • Historic buildings or sites or wahi tapu (sacred) sites
  • Resource consents issued for the property, or for neighbouring properties – for example, subdivision consents or water permits
  • Sewage tank and swimming pool information
  • Motorway proposals affecting the property.

 

What Does a LIM Cost?

The cost also varies between Councils. LIM reports cost about $200- $300.

 

Can I Get the Information Without Applying for a LIM?

Your Council may allow you to inspect its file on the property for a small fee, without the expense of a proper LIM application. However, if you pay for a LIM and the Council makes a mistake in the LIM you may be able to sue the Council to recover any loss you suffer as a result of the Council’s mistake. In a recent case a Council was held liable for $62,500 when it failed to include accurate information about water permits relevant to the property. You may not be able to sue the Council if you inspect the Council’s file yourself.

 

The LIM Condition in the Agreement for Sale and Purchase

You can include a LIM condition in your agreement to purchase the property. If the agreement contains the standard LIM condition then you must apply for the LIM within 3 working days of signing the agreement. Your lawyer can do this for you. The Council must provide the LIM within 10 working days of your application. The standard LIM condition gives you 15 working days to approve the LIM report. If you wish to object to something in the LIM, it is really important to notify the vendor on or before the 15 working days is up, because if you do nothing you are deemed to have approved the LIM.

Some of the more common matters that purchasers object to are: the absence of consents or Code Compliance Certificates for buildings or log fires and swimming pool fencing that does not comply with the law.

If there is something in the LIM you do not like you don’t have the automatic right to end the agreement. The LIM condition sets out a process with strict time frames that must be followed. If you object to something in the LIM and the vendor cannot, or will not, remedy the matter, then you will be able to cancel the agreement.

 

A Useful Record and Peace of Mind

In most cases the LIM report does not contain information that causes any concern, but it is a useful record of the property to keep. Considering the substantial investment involved, the LIM report can provide valuable peace of mind when you purchase land.

 

Please email me at barbara.mcdermott@nwm.co.nz with your ideas for future articles. Keep an eye out for next month's column, where I will discuss another relevant rural legal issue.


Barbara McDermott is a partner of Norris Ward McKinnon, specialising in commercial and rural law. With offices in Hamilton and Huntly, we have friendly, expert legal advisors ready to help you with your business and personal legal matters.