Understanding Separation and Relationship Property Agreements
22 September 2024

Separation and relationship property agreements are crucial legal tools that can be made at any time - before, during, or after a relationship. 

These agreements help clarify who owns what during and after a relationship ensuring that each party knows who owns which assets.

The key law in this area in New Zealand is The Property (Relationships) Act 1976 (PRA). This law says that partners usually share ownership of:

·      the family home;

·      family belongings (like furniture); and

·      any property acquired during the relationship.


The PRA states that any property bought during the relationship is usually considered shared property and is typically split equally if the relationship ends. The family home is treated differently; it is usually shared equally, no matter who owned it before the relationship or how much each partner contributed.


Section 21 Agreements

To ensure a Section 21 agreement is valid, it must meet specific requirements:

·      The agreement must be in writing and signed by both parties.

·      Each party must receive independent legal advice before signing.

·      The signatures must be witnessed by a lawyer.

·      The witnessing lawyer must certify that they explained the agreement’s effects and implications to the signing party.


Even if an agreement satisfies these requirements, a court can set aside (cancel) an agreement if it considers that the agreement would cause serious injustice. For an agreement to be cancelled, this generally depends on whether the agreement was entered into freely and if the terms of the agreement are not fair.

 

Contracting Out Agreements

The couple in the relationship may choose to enter a Section 21 agreement.  This agreement is a legal contract that allows couples to decide how to divide their property if they separate, overriding the default rules set by the Property (Relationships) Act.


Commonly known as ‘pre-nups’, these agreements are essential if you’ve been in a de facto relationship for three years or more, are married, or in a civil union. The PRA applies here. A de facto relationship is defined as “living together as a couple,” which can include not physically living together but demonstrating a commitment to a shared life.


Why have one? If you have any concerns, it’s smart to create a contracting out agreement. These agreements are particularly important in second relationships. Recent legal cases show that putting a home in a trust before entering a PRA relationship won’t protect your assets. Agreements not signed and certified by lawyers won’t hold up in court. These agreements let you decide how to manage your assets and protect certain items if the relationship ends.

 

Post-Separation Agreements

These agreements clarify who keeps what after a separation and whether one person needs to pay out the other to achieve an equal division of the relationship property. It’s important to finalise a separation agreement quickly. Until it’s signed, all shared property remains shared. This means if you buy a house or pay off a mortgage alone, it’s still considered shared property, and your ex could claim it later. They might also have a claim to your estate if you pass away before finalising the agreement.



Separation and relationship property agreements provide important legal protection. Understanding the PRA and the requirements for these agreements helps ensure your assets are safe and ownership is clear. Whether starting a new relationship, currently in one, or recently separated, it’s wise to seek legal advice and consider these agreements to protect your interests.


Our team has experts in this area who are ready to help you navigate your options and make the best choices for your future.

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