If you are considering buying a property, you should carry out due diligence to assess its overall suitability for you and, amongst other things, to ensure all consents have been issued. Two sources of information are the Land Information Memorandum (LIM) and the property file held by local councils. We explain the differences between each.
A LIM contains a summary of the information held by the local council about the property and its neighbourhood. It holds a summary of resource consents and building consents for the property, and perhaps neighbouring properties, and information on rates, including whether rates are outstanding. It may include building plans. It records whether a property, or a building situated on it, has a particular status such as an historic place designation. A LIM contains information on zoning issues and utilities. It identifies, for example, flood plains, areas of erosion or subsidence and other hazards.
If there is an error in the LIM, or an item omitted, this can give rise to a claim against the council.
Agreements for Sale & Purchase commonly include a ‘LIM condition’ that allows a buyer 15 working days to obtain and assess a LIM; this generally takes around 10–12 working days to obtain and costs a few hundred dollars. An urgent request can generally be ordered which takes around two working days to obtain at additional cost.
Property files are held by the relevant council and contain all information known by that council about a property. The file includes full copies of resource consents and building consents (and original plans), rather than the summary found in a LIM. Included is all correspondence with the council about the property — not all of which will be in a LIM.
Conversely, property files do not necessarily include general information about the neighbourhood which is included in a LIM (although this information is available on some council websites).
Some councils have excellent free online searchable property files. Other councils continue to hold hardcopy files only and charge a fee for their inspection.
Agreements for Sale & Purchase do not generally contain a specific clause relating to property files. The file can be inspected before making an offer, or offers can be made subject to a due diligence clause.
Do you need both?
It may be necessary to obtain both a LIM and to inspect the property file before buying a property. If there is a suspicion that some building work was unconsented, for example, assessing the property’s original plans against the summary of consents in the LIM may provide an answer.
Get a LIM as a minimum
Many buyers will be content with obtaining a LIM only, although buyers who can inspect property files for free online will presumably do so. A LIM, however, remains an important resource for buyers.
If you are looking at buying property, do contact our property team at Law North on 09 407 7099 to guide you through the process.
DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the author's knowledge. It should not be a substitute for legal advice. No liability is assumed by the author or publisher for losses suffered by any person or organisation relying directly or indirectly on this article. Views expressed are the author's own and do not necessarily reflect the collective view of Law North Lawyers. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source. Copyright, NZ LAW Limited, 2021. Editor: Adrienne Olsen. E-mail: email@example.com. Ph: 029 286 3650.