What is the Property (Relationships) Act 1976?
The Property (Relationships) Act 1976 sets out the rules for dividing property when marriages, de facto relationships, or civil unions end. It confirms an “equal sharing” rule in New Zealand: that all relationship property must be divided 50-50 if the relationship ends, unless the parties “contract out” of the Act.
The key things to know about the Property (Relationships) Act 1976:
- Equal division: the Act states that relationship property is to be divided equally at the end of the relationship. One spouse may make a claim to the Family Court if they feel that they aren’t receiving an equal share of the assets.
- Does my relationship qualify? For the equal sharing rule to apply, you must be (or have been) either married, in a civil union, or a de facto relationship (see below).
- What if I don’t want the Act to apply? You will need a certified “contracting out” agreement, either during the relationship (Relationship Property Agreement) or once it has ended (Separation Agreement). Both of you will need to be involved, you’ll need separate lawyers to advise you on it, and those lawyers must sign the agreement with you.
Agreeable has crafted this handy guide to give you all the key, relevant information about the Act, covering only the most important aspects and removing as much legal jargon as possible.
Please note: this guide does not constitute legal advice. If you have detailed questions about your specific situation, contact the team at Agreeable and we will point you in the right direction.
Read on to find out more!
What is usually “relationship property”?
If you are married, in a civil union, or in a 3+ year de facto relationship, the Act states that your “relationship property” must be divided equally on separation or death.
Many have heard of relationship property, but what is it usually? To translate the Act’s large list from Section 8 into something a bit more handy, the following assets are almost always found to be relationship property:
- The family home, i.e. where you live together (even if one of the spouses purchased it themselves beforehand!)
- All vehicles, furniture, appliances, and other assets that have been used for the benefit of the relationship.
- Bank accounts and share portfolios, that have been used, even slightly, for the benefit of the relationship, regardless of whose name they are under.
- Kiwisaver/superannuation accounts, credit card & student loan debts, and life insurance policies are usually considered relationship property as well.
Most other assets are likely to be considered the “separate property” of either partner, as defined in section 9 of the Act.
It’s often best to take a “better safe than sorry” approach and consider most of your assets to be relationship property. A certified agreement, such as those offered by Agreeable, lets you both decide what is relationship property and what is separate property.
What is a de facto relationship?
The Act defines a de facto relationship as two people, aged 18 or over, who live together. “Living together”, if it has to be interpreted by the Court, can be defined based on a range of factors. These are set out in section 2D of the Act, and include: the duration, whether a shared home exists, whether a sexual relationship exists, and how finances/assets have been arranged in the relationship.
The general tip from most experts in this area is that if you believe your relationship is close to a de facto relationship, you should treat it as de facto and consider what that means for your assets. Like many things, it is better to be safe than sorry.
Tell me more about this “equal sharing” rule
The equal sharing rule gives the Act an important effect on many Kiwis’ lives. It’s a rule that recognises all contributions to a relationship, not just financial contributions, and protects partners that might not speak up for themselves.
But a 50-50 split doesn’t always make sense or seem fair to certain couples. Therefore, Kiwis are able to make their own decisions and legally formalise them. This is called “contracting out” of the Act, by getting a certified agreement. More in the next section:
Section 21: when you don’t want the Act to apply
The key section for most readers will be section 21, which allows for Kiwi couples (either during the relationship or after) to “contract out” of the Act’s equal sharing rule, and confirm their own decisions with a certified agreement.
Relationship Property Agreement
Often called a “prenup”, “postnup”, or “contracting out agreement”, this is the version of s21 agreement that you get while still in the relationship. This agreement will typically feature a home or business that one party brought into the relationship, or even just set out that each partner would like their bank accounts, Kiwisavers, and debts to remain their own regardless of what happens in the future.
It’s best to get this early (i.e just before marriage or early in it) before your asset pool and contributions get thoroughly mixed.
These work in a similar way, but are for separated couples to make final decisions on the relationship assets, and who gets to move on with what. Often, these agreements set out that the family home will be sold and the proceeds divided, or one party will “buy out” the other party’s share of the home. They will also usually list each party’s sole bank accounts, Kiwisaver, and debts as their own separate property.
NOTE: your RPA or SA must be certified to be legally binding
To get your agreement certified (and keep you out of court for good!), on top of the agreement itself, you will need two different lawyers (one for each of you) to:
- Give you full legal advice on the implications of your agreement
- Witness your signature
- Sign the agreement with you
Agreeable offers a full, online certification service where we provide you with two lawyers from our nationwide panel, to give legal advice and sign the agreement with you via video signing. We regularly save Kiwis over $1,000 towards the total cost of the agreement. Download our guides above, or get in touch with our team today to find out more.
Other key points to note about the Property (Relationships) Act
There are a number of smaller parts & sections of the Act that may be relevant to you. We will list a few of the more common ones here, but if you have a question that isn’t answered here, feel free to get in touch us here at Agreeable. We have a dedicated team that is just an email, phone call, or live message away – we’re happy to help you figure out what you need today.
What if we have property in a trust?
Trusts do not necessarily protect assets from being considered relationship property. This is particularly true for the family home and family chattels (section 10(4)). The Family Court has been known to order compensation from the party with the trust, to the other party, for a number of factors. Trust assets can be included in contracting out or separation agreements to let you decide whose property it is.
What if our financial positions might be quite different upon separation?
Section 15 of the Act sets out that the Court may order that the party with “significantly” lower income and living standards to the other party may receive more than half of the relationship property. While this protection is in place, enforcing it would require going to Family Court, which can take many months in New Zealand. Instead, getting a certified separation agreement would keep you out of court and save you much of the hassle.
What if our relationship lasts less than three years?
Different rules apply for relationships of a “short duration”, which is less than three years, according to section 14. For short marriages or civil unions, property is generally divided according to the contributions of each to the relationship. De facto relationships of less than three years are unlikely to apply to the Act, unless there is a child in the relationship, or if failing to bring the relationship under the Act would result in serious injustice.
What happens to relationship property if one partner dies?
If one partner dies and you don’t have a contracting out agreement, the surviving partner can choose between (a) their 50-50 entitlement under the Act, and (b) whatever is set out in the deceased partner’s will. If there is also no will, the Administration Act sets out how the estate will be distributed. Note that the surviving partner has priority over beneficiaries of a will.
What about overseas property?
The key is whether the property is “movable” or “immovable” under the Act (section 7). Movable property is anything that isn’t physical land or buildings, such as vehicles, chattels, bank accounts, shares, debts etc. The Act applies to all movable property, in NZ and overseas. Immovable property is all land and buildings. Only immovable property situated in New Zealand, however, comes under the Act and can be divided up either by court or in your own contracting out agreement. To deal with overseas land/buildings, you will need to get an agreement under that country’s laws.
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