It is common practice for sellers of property or their real estate agents to provide a LIM as part of the property information pack when marketing their property for sale. This is a great help to house hunters as LIMs are expensive, especially when you have to scrutinize many properties before finding the one!
While every penny counts when you are buying property, you should be aware that, if you rely on a LIM provided by the seller or real estate agent, you could be risking much greater expense if it turns out that the LIM was wrong.
If it transpires that the LIM contains errors or has left out something important, it may only be possible for a purchaser who bought their own LIM directly from the Council to make a successful claim against the Council to recover their losses (suffered as a result of the faulty LIM).
This is because if you don’t have a close enough relationship with the Council in respect to the LIM – ie. you were not the applicant who requested or paid for the LIM – then you may not be able to establish that the Council owes you a “duty of care” in respect to the information contained in the LIM.
It is necessary to prove that the Council owes you a “duty of care” to win a claim against the Council for a defective LIM. And for the “duty of care” to exist, your relationship with the Council must be “sufficiently proximate”.
This position was affirmed in the case of Monticello Holdings Limited v Selwyn District Council [2016] 2 NZLR 148 where it was held that “The SDC does not owe a duty of care, to the world at large, to maintain complete records to ensure that any potential LIMs ever issued are correct…” If a duty of care does exist it “…must be founded on a sufficiently proximate relationship. And as the authorities suggest, in interactions with local authorities, such proximity will ordinarily be established by a fee-paying relationship (though this is not exclusively the case).”
If you need to rely on the information contained in a LIM, then you should obtain the LIM from the Council yourself.
If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry and Co. who normally advises you, or alternatively contact:
Fahra Manning
fmanning@farry.co.nz
09 353 6678
The information contained in this publication is intended as a guide only. It does not constitute legal advice and should not be relied upon as such. Professional advice should be sought before applying any of the information to particular circumstances. While every reasonable care has been taken in the preparation of this publication, Farry and Co. does not accept liability for any errors it may contain.