What to look out for in a LIM report

Like most lawyers, we encourage our clients looking at a property to get a LIM report.  A strong move towards vendors providing LIMs has meant we’re reviewing more than ever before.   You may have come across lawyers who strongly recommend that purchasers get their own LIM and that they shouldn’t rely on one provided by a vendor. The reason for this is that a purchaser cannot sue the relevant Council for incorrect information in a LIM if they haven’t directly obtained it. While this is nice in a perfect world, the reality is that most purchasers don’t have the time to order one, or the willingness to pay for one, and instead rely on the one provided by the vendor.

So what does this all mean for you as agents? Where you’re providing a LIM to potential purchasers you need to know what it says. As you’ve no doubt experienced, LIMs are lengthy and contain more explanations than substance! So, we thought we’d help you decipher one and highlight some key things to look out for.

Is the LIM current?
If the LIM hasn’t been ordered within a month or two of listing the property, order a new one.  A LIM is a snap shot of Council information at the time it was prepared.  Although the vendor may not have done any work since they got the old one, other things could have changed.

Have the correct boxes been ticked for any work done?
The LIM will list all of the historic building permits and building consents issued.  Check that a code of compliance certificate has been issued for each building consent (don’t worry about building permits as code of compliance certificates weren’t required for work done under a building permit). 

Building consent work that hasn’t had the final signoff is a big red flag for lawyers as it can affect a purchaser’s ability to borrow money and insure the property.

Also have a think about whether the property has any of the following features on it and whether the correct consents/certificates have been obtained – recent renovations, retaining walls, fireplace, swimming pool.

Spotting issues early on is crucial as the vendor is warranting under the Sale and Purchase Agreement that where they have done work on the property the correct consents and code of compliance certificates have been obtained.

Encroachments – licensed and unlicensed
The LIM will list any encroachment licences issued for the property – for example where there’s a car pad or garage on Council land.  The aerial map page of the LIM might also show any unlicensed encroachments (for example where part of a house is on Council land).  It’s important that any unlicensed encroachments are disclosed to potential purchasers to avoid the title being requistioned under clause 6.2 of the standard agreement and the sale potentially falling through.

What has the property been used for previously?
Is there any record in the LIM of potential contamination because the property used to be a petrol station or is built on an old rubbish dump.

What’s the zoning for the property?
This is particularly important if a purchaser wishes to use a property for a reason other than residential.   The zoning rules set out what a home owner can and can’t do with their property.   Zoning information also extends to physical aspects of the property such as wind and sea spray zones.

Here’s a list of a few other issues we’re looking for when we’re reviewing a LIM:

  • Are there any notifications regarding neighbouring properties, roading or any other proposed development in the area?
  • What’s the likelihood of liquefaction?
  • Have there been any weather tightness issues reported?
  • Do any drainage pipes run underneath the property?
  • Have there been any drainage issues?

While this list isn’t exhaustive, we hope it helps next time you’re looking through a LIM. If an issue crops up you’d like to run past a lawyer, feel free to give us a call – 04 390 2123.