By Diana Clement, MSN Money expert
It's a little word with very big consequences. Getting a land information memorandum (LIM) is one of the most important things to do when buying home. If you don't, you could wreck your financial future, quite literally.
A LIM is a record of information held by your local council on a property. It includes things such as rates details, consents and notices relating to this and neighbouring properties, potential erosion risks, contamination, or flooding risks.
It can alert you to illegal works on the house if there is no code compliance certificate, the fact that it may leak, or proposed road widening or new roads that could impact your dream property. You may also find that a storm water drain flows exactly where you wanted to dig down and create a basement. Ouch.
It is usual for sale and purchase agreements to buy a house to contain a clause that makes the property sale conditional on you getting and approving the LIM.
A LIM usually costs a few hundred dollars, which is small fry compared to what you could lose without it. Imagine if you bought a house, just to find that it was leaky and repairs could cost tens or even hundreds of thousands of dollars.
To get a LIM, call your local council and ask about the procedure. You might be able to order one online. The council has 10 working days to issue a LIM when requested.
A LIM is a very complex document and it's a good idea to both read it yourself, and have your solicitor view it.
Beware, however, a LIM doesn't provide all the information needed for buying a property. It's a good idea to view or buy a copy of the council's file on the property. That will include more information such as easements, accurate boundaries, and contamination reports from regional councils, building plans and building restrictions.