A man was about to put his investment property on the market, a rather run-down rental property in the inner city. 

He discussed with his agent whether or not he should provide a builder’s report and a LIM Report for potential purchasers.  The vendor knew there were piles at the property that needed replacing but he didn’t want anything to “hold up” the sale, and thought that purchasers need to do their own investigations and find out any issues for themselves.


The first thing to be aware of is that if there is any defect or other matter that you know about in relation to the property, whether you are a vendor or an agent of the vendor, then this matter must be disclosed to purchasers. 

This extends to knowledge of developments in neighbouring properties e.g. a resource consent for property renovations or developments next door that may impact on the property to be sold, such as the development of a multi-unit complex.

As a vendor you cannot ‘hide’ these things from a purchaser.  These sorts of matters, along with consents for any works done to a property that required building consent, will show up in a LIM report. 

Vendor Warranties and Undertakings

To ignore this disclosure obligation means you risk being in breach of your vendor warranties and undertakings in the standard Auckland District Law Society Agreement for Sale and Purchase. 

It is important you are aware of all your obligations under this agreement, including in relation to any “notice or demand”; “knowledge of any requisition or outstanding requirement” from local authorities, legislation, tenant or any other party, which “directly or indirectly affects the property.” 

What is the difference between a Builder’s Report and a LIM report?

These reports are very different, and for different purposes.

A LIM report is a report from Council showing all matters Council has records of in relation to a property.  This includes any works that have been carried out on a property, that Council has been notified of, and whether those works have had a Code Compliance Certificate granted, confirming they meet the Building Code. 

A LIM report will not show any works that should have had a building consent applied for, but didn’t.  Council only know what they have been told.  A builder, as part of their builder’s report, will generally be able to tell by looking at certain works whether they should have had a building consent, and you can then compare this to the LIM report.

A Builder’s report is a report carried out by a builder, after they look at the quality of the build, moisture readings, outstanding maintenance and other matters.  The report is the opinion of the builder.

The advantages of providing LIM Reports and Building Reports to potential purchasers

  • You may attract more offers, as sometimes potential purchasers who have had offers repeatedly rejected are reluctant to bear the cost of obtaining these reports themselves;

  • Transparency as to the state of the property from a building/consent perspective  e.g. if there is an outstanding building consent for the property – this is something that purchasers can factor into their offer and communicate with their bank and insurer in the early stages;

  • There will be no “surprises” that may set in motion a series of protracted negotiations or the expense of a variation of contract, or worse – a transaction that comes to an end. The latter may mean that you have lost other potential purchasers who have gone elsewhere in the meantime.

  • Less risk of your sale transaction “falling over”, as all information has been provided upfront.

Are there any disadvantages of providing LIM Reports and Building Reports to potential purchasers?

  • There is a risk that the reports will find issues that you didn’t know about.  If this is the case, you may need to either consider undertaking additional works at your property prior to putting it on the market, or consider lowering your sale price expectations to a more realistic sum in light of what you now know.

  • The purchaser won’t be able to rely on your builder’s report or LIM report, as they did not directly order them so there is no contractual relationship between them and the builder or Council.  Some cautious purchasers will want to order their own reports in any case.

If you are wanting to sell your property, knowing there are issues or matters outstanding that a purchaser will have to disclose to their bank and insurer, it is best they have the opportunity to do so before they submit an offer or early in the transaction, rather than issues bringing the transaction to a grinding halt when it comes time to confirm any conditions.

If you are selling your property, seek legal advice on the Agreement for Sale and Purchase and the agency’s disclosure documentation prior to the agent providing copies to potential purchasers.

Therese Greenlees
Registered Legal Executive