Common Issues Found in LIM Reports
When purchasing a property in New Zealand, obtaining a Land Information Memorandum (LIM) report is a crucial step in the due diligence process. A LIM report provides valuable information about a property, including its zoning, consents, and potential hazards. However, it’s essential to be aware of common issues that may appear in these reports. This article explores the most frequent problems found in LIM reports and offers guidance on how to address them.
Unconsented Building Work
One of the most common issues identified in LIM reports is unconsented building work. This occurs when alterations or additions have been made to a property without obtaining the necessary building consents from the local council.
According to the Building Act 2004, most building work requires a consent before commencement. Unconsented work can pose significant risks, including safety concerns and potential legal issues when selling the property.
How to address it:
- Engage a building inspector to assess the quality and safety of the work.
- Consider applying for a Certificate of Acceptance from the council, which can retrospectively approve the work if it meets building code standards.
- Negotiate with the seller to have them obtain the necessary consents before purchase completion.
Outstanding Code Compliance Certificates
A Code Compliance Certificate (CCC) is issued by the council when building work is completed and complies with the building consent. LIM reports often reveal that CCCs are missing for previous building work.
How to address it:
- Request that the seller obtains the outstanding CCC before settlement.
- If the seller cannot obtain the CCC, consider the potential costs and risks of doing so yourself after purchase.
- Consult with your lawyer about including a condition in the sale and purchase agreement regarding the outstanding CCC.
Zoning and Land Use Issues
LIM reports provide information about the property’s zoning and any restrictions on land use. Common issues include:
- Proposed zoning changes that could affect future use or development of the property.
- Restrictions on subdivision or further development.
- Special land features that may limit building activities.
How to address it:
- Consult with a town planner or lawyer to understand the implications of zoning issues.
- Consider how the zoning aligns with your intended use of the property.
- If necessary, investigate the possibility of obtaining resource consents for your planned activities.
Natural Hazards
LIM reports often contain information about natural hazards that may affect the property. In New Zealand, this can include:
- Flood-prone areas
- Earthquake risks
- Coastal erosion zones
- Land instability or subsidence
The Christchurch City Council, for example, includes specific notations about coastal hazards in LIM reports for affected properties.
How to address it:
- Consult with experts such as geotechnical engineers or coastal specialists to assess the risks.
- Consider the potential impact on insurance premiums and coverage.
- Investigate any council plans for hazard mitigation in the area.
Drainage and Stormwater Issues
LIM reports may reveal problems with drainage or stormwater systems on the property. This can include:
- Inadequate or poorly maintained drainage systems.
- Overland flow paths that could affect the property during heavy rainfall.
- Shared private drains that may require maintenance agreements with neighbours.
How to address it:
- Engage a drainage specialist to assess the property’s systems.
- Consider the costs of upgrading or maintaining drainage infrastructure.
- Review any shared maintenance agreements for private drains.
Historical or Heritage Designations
Some properties may have historical or heritage designations that restrict alterations or renovations. These designations can significantly impact your ability to modify the property.
How to address it:
- Research the specific restrictions associated with the designation.
- Consult with the local council’s heritage team about potential modifications.
- Consider whether the designation aligns with your long-term plans for the property.
Outstanding Rates or Charges
LIM reports will show any outstanding rates or charges owed to the council. These debts typically become the responsibility of the new owner upon settlement.
How to address it:
- Ensure that all outstanding amounts are paid by the seller before settlement.
- If there are disputes over charges, have your lawyer negotiate with the seller and council to resolve them prior to purchase.
While LIM reports can reveal various issues, it’s important to remember that many of these are common and can often be resolved. The key is to identify potential problems early in the purchase process, allowing time for further investigation and negotiation.
When reviewing a LIM report, consider engaging professionals such as lawyers, building inspectors, and town planners to help interpret the information and advise on the best course of action. Remember that a thorough understanding of the LIM report can save you from unexpected costs and legal issues down the track.
Ultimately, the issues found in a LIM report should be viewed as valuable information that empowers you to make an informed decision about your property purchase. By addressing these issues proactively, you can ensure a smoother transaction and greater peace of mind in your new home.