A common thing we encounter in practice are Kiwis believing that the Property (Relationships) Act 1976 (PRA) only applies to married couples. We’re here to tell you if you didn’t know, that this is not the case.
In New Zealand, if you’ve been living with your partner for three years or more, you may be treated the same as a married couple under law. This means that if your relationship ends, any relationship property could be subject to equal division between the two of you regardless of who owns it.
What is a “de facto” relationship?
Under the PRA, a “de facto” relationship exists when two people live together as a couple but are not married or in a civil union. However, it is good to keep in mind that that there’s no single rule that determines whether a relationship qualifies. The law will look at the overall nature of your relationship to figure this out.
The Courts consider factors such as how long you both have lived together, whether you share your finances, if you own or use property jointly, if you have children together, and how you present yourselves publicly to others. Every relationship is assessed on its own facts with a broad, common-sense approach to what “living together as a couple” means.
The three-year mark
Once your relationship reaches three-years (happy anniversary) the PRA’s equal sharing rules will usually apply. This means that from here on out relationship property, which is generally anything acquired during your relationship, will typically be divided 50/50 if you separate.
Importantly, this applies regardless of who paid for the asset or whose name it is registered in. It’s about when and how the property was acquired, not how ownership is recorded. This means that if you separate after three years of living together as a couple, you could have to pay your ex half of the value of a new car you bought during your relationship.
If your relationship has lasted less than three years, equal sharing doesn’t automatically apply. However, there are exceptions. For example, the court may step in where there is a child of the relationship or where one partner has made a significant contribution to the relationship, and it would be seriously unfair not to recognise it.
Does a relationship start from the first date, or when a couple begins living together?
The three-year period generally starts from when you begin living together—not from the awkward first date, or when the relationship becomes serious, or when you get engaged, or you eventually marry.
This can catch people off guard, as even a relatively short period of living together beyond three years can mean the PRA applies in full, and all your relationships property gets split 50/50.
What counts as relationship property?
The PRA treats de facto (living together as a couple for more than three years, remember) and married couples in the same way when it comes to property. Relationship property typically includes the home you both lived in (referred to as the “family home”), joint finances and joint debts, any increase in KiwiSaver balance during the relationship, and all assets purchased with joint funds during the course of the relationship. Any increase in value of those assets may also be included.
Assets you owned before the relationship or that you received as a gift or as inheritance are classified as separate property, and these generally remain yours. However, separate property can become relationship property if it becomes intermingled with relationship property over time.
Does keeping our finances separate help?
While many couples choose to keep their finances separate, this does not usually prevent the PRA from applying. The law looks at substance over form, so income earned during the relationship and assets attained from that income are likely to be treated as relationship property, regardless of how your bank accounts are structured.
Can you agree on something different?
Yes! Couples can enter into a contracting out agreement (which many people know as a pre-nup) either before or during the relationship. This allows you to set your own rules about how property will be divided if you separate and provide you with certainty.
If you are bringing assets into a relationship, such as property, savings, an inheritance, or a business, seeking legal advice early can make a significant difference in case things turn sour.
Get advice from Godfreys Law early
Whether you are moving in with a partner or going through a separation, understanding your rights early is key. While the PRA itself is relatively straightforward, how it applies will always depend on your individual circumstances.
Talk to a relationship lawyer in Christchurch
Raaj, Kate, and Teneille at Godfreys Law specialise in relationship property and are experts in all things de facto relationship, contracting out agreement, and separation.
If you would like to discuss your situation, get in touch with the Relationship Property team at Godfreys Law on 03 366 7469.
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