De Facto Relationships & Relationship Property
June 14, 2020
Many couples move in together and unwittingly end up in qualifying de facto relationships, without considering the implications under the Property (Relationships) Act 1976.
The Property (Relationships) Act dictates how property is divided when a qualifying relationship breaks up. Under this regime marriages, civil unions and qualifying de facto relationships are all treated the same. Only certain de facto relationships qualify for division under the Act.
A de facto relationship is defined in section 2D of the Act as a relationship between two people over 18, who live together as a couple, and are not in a marriage or civil union. The concept of 'living together as a couple' involves many factors such as childcare responsibilities, shared finances, and even how you divide your household chores. In rare situations, a couple may be in a de facto relationship even if they do not live together.
Once parties have 'lived together as a couple' for three years, the default provisions of the Property (Relationships) Act will apply, unless the parties have contracted out of the Act. In certain situations, a relationship will come under the regime before the three-year period has passed, for example where the parties have had children.
Under the Property (Relationships) Act there is a presumption that relationship property will be shared equally. Relationship property is broadly defined in the Act and includes many items that you may not anticipate are relationship property, for example your Kiwisaver account.
Separate property can be converted to relationship property, for example where parties move into a home owned by one party, it may become the relationship home and subject to equal sharing.
It is important to consider these issues early on in a de facto relationship, before you unintentionally become subject to the Property (Relationships) Act regime. The implications can be significant, particularly where there is a house involved.
You can contract out of the Act at any time before entering, during, or after ending a de facto relationship - but certain formalities must be complied with for an agreement to be valid. Both parties must have their own lawyer, who independently advises them on the agreement, and certifies that they have done so.
If you would like advice on a contracting out agreement or your entitlements under the Property (Relationships) Act 1976, contact our team at email@example.com to discuss your individual circumstances.
Disclaimer: The information contained in this article is general in nature and not tailored to your personal circumstances. It is only current as at the date posted and should not be relied upon as legal advice. If you require legal advice, please contact us for further assistance.