What is the primary purpose of a LIM (Land Information Memorandum) in the sale and purchase process?
Correct Answer
C) To provide council-held information about the property, including consents and rates
A LIM provides important council-held information about a property including building consents, resource consents, rates information, and any known issues. This helps buyers understand the property's history and any potential council-related matters.
Why This Is the Correct Answer
A LIM, issued by the territorial authority under LGOIMA s 44A, sets out council-held information such as consents, notices, rates owing, natural hazards and other special features of the land.
Why the Other Options Are Wrong
Option A: To provide a current market valuation of the property
A LIM does not value the property. That needs a registered valuer or an agent's appraisal.
Option B: To confirm who legally owns the property and what interests are registered against it
Ownership and registered interests are shown on the record of title held by LINZ, not in a LIM.
Option D: To identify every registered mortgage secured over the property
Registered mortgages appear on the record of title. A LIM does not list them.
Deep Analysis of This Sale Purchase Question
A Land Information Memorandum (LIM) is a crucial document in New Zealand property transactions that serves as a comprehensive repository of council-held information about a specific property. Under the Local Government Official Information and Meetings Act 1987, territorial authorities are required to provide LIMs upon request. This document consolidates various council records including building consents, resource consents, rates information, zoning details, and any compliance issues or notices affecting the property. The LIM is essential for due diligence as it reveals the property's regulatory history and potential future obligations. Unlike other property documents that focus on ownership or valuation, the LIM specifically addresses the relationship between the property and local government requirements, making it invaluable for identifying potential risks, compliance issues, or development opportunities that could significantly impact the property's value and usability.
Background Knowledge for Sale Purchase
A Land Information Memorandum (LIM) is a document provided by territorial authorities under the Local Government Official Information and Meetings Act 1987. It contains council-held information about a specific property including building consents, resource consents, rates information, zoning classifications, special feature areas, and any notices or compliance issues. LIMs are distinct from other property documents: Certificates of Title (from LINZ) show ownership and encumbrances, while building reports assess physical condition. LIMs typically cost between $200-$400 and are valid for three months. They're essential for due diligence as they reveal regulatory history and potential future obligations that could affect property value and development potential.
Memory Technique
Remember LIM as 'Local Information Memory' - it's the council's memory bank of everything they know about your property. Think of the council as keeping a detailed diary about each property, recording every consent, rate payment, and issue over the years. The LIM is like reading that diary.
When you see LIM questions, immediately think 'council information' and eliminate any options about ownership (that's LINZ/title), valuation (that's valuers), or mortgages (that's also title). Focus on what the council would know and record.
Exam Tip for Sale Purchase
For LIM questions, remember the key phrase 'council-held information.' Eliminate options about ownership, valuation, or mortgages - these come from other sources. LIMs are all about what the local council knows and has recorded about the property.
Real World Application in Sale Purchase
Sarah is purchasing a property in Auckland and orders a LIM as part of her due diligence. The LIM reveals that while the house appears to have four bedrooms, only three have building consent - the fourth was added without permission. It also shows unpaid rates of $3,000 and a noise control notice from two years ago. This information, unavailable elsewhere, allows Sarah to negotiate a lower price to cover the consent costs and rates, and understand potential ongoing issues. Without the LIM, these costly surprises would only emerge after purchase.
Common Mistakes to Avoid on Sale Purchase Questions
- •Confusing LIM with record of title - LIM is council info, title is ownership info
- •Thinking LIM provides market valuations when it only contains factual council records
- •Assuming LIM shows mortgages when these are recorded on the title through LINZ
Related Topics & Key Terms
Key Terms:
More Sale Purchase Questions
A property is sold at auction for $850,000 with a 10% deposit required. The successful bidder has concerns about the LIM report after the auction. What is their legal position?
What deposit is most commonly agreed in New Zealand residential sale and purchase agreements?
When does an Agreement for Sale and Purchase become unconditional?
In a property auction, when is the sale considered complete?
How is the settlement date set in a New Zealand residential sale and purchase?
- → What typically happens to the deposit when an unconditional sale and purchase agreement is signed?
- → During settlement, what document transfers legal ownership of the property from vendor to purchaser?
- → A property is passed in at auction for $800,000 with a reserve price of $850,000. The highest bidder approaches the vendor immediately after. Which statement is most accurate about the subsequent negotiation?
- → When does an Agreement for Sale and Purchase become unconditional if it contains a finance condition with a 10 working day timeframe?
- → What is the typical deposit amount required immediately after a successful auction bid in New Zealand?
- → Under the standard TLANZ/REINZ Agreement for Sale and Purchase, who is typically responsible for paying rates from the settlement date?
- → At an auction, the reserve is $800,000 but bidding stalls at $750,000. The vendor then negotiates with the highest bidder and they agree to sell at $780,000, signing on the auction terms with no conditions. What type of sale is this?
- → A purchaser has included a finance condition with a 10 working day deadline. On day 8, they receive loan pre-approval but final approval is pending. What should they do?
- → What happens if a purchaser fails to pay the deposit by the specified deadline in the Agreement for Sale and Purchase?
- → Which document sets the terms that will bind the successful bidder, and so should be available for bidders to inspect before the auction begins?
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