1. What is a LIM report?
A Land Information Memorandum (LIM) is a report issued by the local city or district council which provides a summary of all the information that the local authority has on file about that property.
In particular, it reports on all works on the property that the council has had involvement.
It may alert you to matters that you may not notice in a typical viewing of the property.
LIM reports costs approximately $400 and will typically include:
- Zoning information
- Information on natural features that impact the use of the property (such as flooding or erosion, wind risk and subsidence)
- Scheduled roads or utility developments, e.g. drainage, which impact the site
- Details of current rates, and outstanding rates, if any, owed on the property
- Information on any protected or heritage buildings or trees on the property
- Details of resource consents, or building consents issued for work on the property.
- It can tell you if previous alterations or construction works has been signed off by the council.
- It may show areas liable to flood or which may be prone to subsidence or erosion causing problems in the future.
- A LIM may also alert you to matters such as road widenings or new routes which may affect your amenity or the future value of the property.
- Always look at the LIM in the context of what is currently in place at the property. It’s important to note that not all works done on a property will appear on a LIM as not all works require council involvement. However, if there is noticeable construction not listed in the LIM, you should discuss this with your lawyer and the real estate agent prior to making an offer.
- Generally speaking, it is a good idea for your lawyer to look over the LIM as they may spot something you could miss. If you wish to make an offer on the property, you can request that any aspects of the LIM that are of concern be remedied by the vendor as a condition of sale.
2. What is a Building Inspection report?
A building inspection sometimes called a Pre-purchase Building Inspection report is a detailed property survey and includes a visual inspection of the components of a building, i.e. the interior, exterior, outdoor, roof and site areas.
General inspections of a house’s plumbing, moisture and electrical conditions are also reported.
It is important to note that building inspectors do not perform intrusive or destructive inspections.
When faults or defects are discovered, the building inspector will make recommendations for maintenance or remedial work (and in some cases will provide an estimation of the costs involved)
This will give you a rough idea of what kind of work may be involved to ensure everything is in order if you decide to move forward with the purchase.
A building inspection is not required by law, but is highly recommended and can cost anything up to $1,000.
However, as the pre-purchase inspection industry is not regulated in New Zealand, it is recommended to use a qualified building inspector who has professional indemnity insurance and who carries out their work in accordance with the New Zealand Property Inspection Standard.
3. Why do I need a lawyer?
Buying a house is a big investment, and there is a lot that can go wrong.
A lawyer or conveyancer will protect your interests, in other words, they will act independently as their purpose is to work for you.
It is recommended that you engage one early in the process and
never sign a sale and purchase agreement without getting legal help first.
The cost of their services will vary depending on the circumstances but you can expect to pay somewhere between $1,000 and $2,500.
Here is a list of the main matters they will assist you with:
- Sale and purchase agreement: They should review the agreement before it is signed to make sure it contains standard terms and doesn’t contain anything unusual. They should also explain key risks, if any, and ensure the deal is documented correctly.
- Record of title: It’s their job to do a title search and advise you of any information that affects you as the buyer, including easements, covenants, consent notices and other matters.
- LIM report and council files: If there is a LIM condition (and even sometimes when there is not) the lawyer or conveyancer should help you order a LIM, and help you review building permits, code compliance, utilities, supply, and other issues.
- Conditions: Most sale and purchase agreements include conditions based on a building report, the LIM, or another matter related to the property. A lawyer or conveyancer can help draft these conditions.
- KiwiSaver: If you are relying on withdrawing funds from KiwiSaver funds or gaining a Homestart grant, your lawyer can assist with this process.
- Transfer and mortgage documents: Most property deals include mortgage and loan documents that can run to many pages and are usually written in legalese so they’re hard to follow. Your lawyer can talk you through them in everyday language so you understand what you are committing to.
- Settlement day: Ensure the purchase proceeds (your deposit, kiwi saver, and the bank funds) end up in the right place.