The whys and where­fores of property agree­ments

Kapi-Mana News - - OPINION -

If you are liv­ing to­gether in a mar­riage, civil union or de facto re­la­tion­ship, or you are in­tend­ing to en­ter into such a re­la­tion­ship, you need to be aware of the laws that cover your property rights.

The Property (Re­la­tion­ships) Act 1976 (‘‘the Act’’) is the piece of leg­is­la­tion in New Zealand that cov­ers the di­vi­sion of property be­tween cou­ples.

For the Act to ap­ply, the re­la­tion­ship usu­ally needs to be three years or more (al­though there are some ex­cep­tions).

The length of a de facto re­la­tion­ship be­fore a mar­riage is counted as part of the three years and a per­son can also be in two re­la­tion­ships at the same time that both qual­ify un­der the Act.

In the event a cou­ple sep­a­rate, the gen­eral rule is that if you have been mar­ried, in a civil union or lived to­gether in a de facto re­la­tion­ship for three years or more, any re­la­tion­ship property will be di­vided equally.

Again, there are some ex­cep­tions to this rule. For ex­am­ple, if one part­ner has put his or her ca­reer on hold to care for the chil­dren or look af­ter the home, that per­son may be en­ti­tled to more than 50 per cent of the re­la­tion­ship property pool.

It should be noted that ‘‘re­la­tion­ship property’’ in­cludes not only as­sets, but debts as well.

Re­la­tion­ship property can also in­clude property that was owned by one part­ner be­fore the re­la­tion­ship be­gan.

For ex­am­ple, J and B be­gan liv­ing to­gether in a de facto re­la­tion­ship six years ago.

When they started liv­ing to­gether they lived in the house B had owned for two years be­fore their re­la­tion­ship.

B con­tin­ued to pay the mort­gage on the home dur­ing their re­la­tion­ship, and J helped out with the house­hold bills, also con­tribut­ing to some main­te­nance and im­prove­ments on the home.

When they re­cently sep­a­rated, B was pretty sure that the house would still be his, be­cause it was in his name and he owned it be­fore their re­la­tion­ship.

He also paid the mort­gage and early on in their re­la­tion­ship J had agreed it was ‘‘his house’’.

How­ever, be­cause they had been in a de facto re­la­tion­ship for more than three years, with­out any mea­sures in place to pro­tect B’s in­ter­est in the home, the property they lived in had be­come re­la­tion­ship property and there­fore was to be shared equally.

J was en­ti­tled to a half-share in the home.

If you and your part­ner sep­a­rate and if your re­la­tion­ship is one that the re­la­tion­ship property laws ap­ply to, the property that you each own will be clas­si­fied as ei­ther your sep­a­rate property or your re­la­tion­ship property.

Any ‘‘ sep­a­rate property’’ is re­tained by the part­ner who owns it, and any re­la­tion­ship property will usu­ally be di­vided 50/50 (al­though there are some ex­cep­tions).

Re­la­tion­ship property laws can some­times ap­ply to re­la­tion­ships of less than three years – for ex­am­ple, if there is a child of the re­la­tion­ship.

A de facto re­la­tion­ship is de­fined as ‘‘liv­ing to­gether as a cou­ple’’. How­ever, that can in some cir­cum­stances ap­ply even if you haven’t packed bags and boxes and phys­i­cally moved in to­gether.

Sev­eral other fac­tors are taken into ac­count, in­clud­ing how you and your part­ner ar­range your fi­nances, whether there is a mu­tual com­mit­ment to a shared life and whether a sex­ual re­la­tion­ship ex­ists.

It is pos­si­ble to live at dif­fer­ent ad­dresses but still be deemed to be in a de facto re­la­tion­ship for the pur­pose of the Act.

Re­la­tion­ship property laws can ap­ply to as­sets such as your home, your busi­ness, your su­per­an­nu­a­tion, any in­vest­ments you may have, your ve­hi­cle( s), house­hold chat­tels, stu­dent loans and other debts.

Putting property into a trust or a com­pany does not nec­es­sar­ily pro­tect the property from form­ing part of ‘‘re­la­tion­ship property’’ pool.

Any in­her­i­tance you re­ceive can also be­come re­la­tion­ship property if you do not know how to pro­tect it as sep­a­rate property.

To have the best pro­tec­tion for your property from any re­la­tion­ship property claims, you may need to en­ter into a Con­tract­ing Out Agree­ment.

That is a writ­ten agree­ment be­tween you and your part­ner that can record who owns what property.

For such an agree­ment to be valid, it must be signed by each of you and your in­de­pen­dent so­lic­i­tors. There are strict for­mal re­quire­ments that need to be com­plied with for such an agree­ment to be valid.

Col­umn cour­tesy of Rainey Collins Lawyers phone 0800 733484. If you have a le­gal in­quiry you would like dis­cussed, email Alan on aknowsley @rain­ey­collins.co.nz.

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