WHAT IS A ‘LIM’ AND WHY DO YOU NEED ONE?
A Land Information Memorandum (“LIM”) report is a summary of information about a property prepared by the local council. A LIM report usually provide details of rates and town planning matters and, more importantly, details of any requisition or building permit affecting the buildings on the land you as the purchaser is proposing to purchase. The LIM report would show details on a property such as plumbing, drainage, water reticulation plans, consents, licences and permits etc. It is essential a buyer ascertains whether any works may have been carried out without notification to Council, as this can have a significant impact on obtaining finance, and full house insurance cover.
Obtaining a LIM report is a standard clause in a sale and purchase agreement, but not every buyer gets one. You can obtain information about a property from council offices, but cannot take the property file with you (although you may photocopy pages for a fee). When obtaining a LIM report, you have the opportunity for your solicitor to look over your LIM as they will be familiar with its content and notice things you might not.
The LIM report can take up 10 working days to be prepared by Council so order it as soon as possible once you have had your offer accepted and have a fully signed and dated sale and purchase agreement. Some councils offer an urgent service for preparing a LIM at an added cost.
Three Key Areas to Check on a LIM
Building consents for Council approved works undertaken on a property will be noted on a LIM. Ensuring these appear on the LIM will mean any alteration works on the property comply with Council regulations. Lack of building consents can lead to difficulties obtaining full house insurance, with no exclusions, which in turn makes getting your finance approved more difficult.
Special Land Features
Any land features relating to the property such as potential erosion, slippage or flood zones will appear on the LIM. Once again, this can affect your house insurance and in turn your finance.
Requisitions Affecting The Property
The Council may have placed a requisition or notice requiring the land owner take action to remedy a land or building related issue that is currently not compliant. This can affect your finance approval as you may need to show you have funds to remedy these issues yourself as well as have enough deposit to meet the Loan to Ratio (LVR) requirement for the finance approval.
Having knowledge of these key areas will help you to make a considered purchase decision. Remember you can include a clause in the Sale & Purchase Agreement to either arrange for a remedy by the seller or enter into negotiation to satisfy both parties. Keep in mind your lender will need to be aware of the reason for any deduction from the initial agreed price, and may impose further conditions on your lending.