De Facto Relationships and Property Rights in New Zealand
The Property (Relationships) Act 1976 (the PRA) governs how relationship property is divided when a marriage, civil union, or de facto relationship ends, or when a partner dies. For de facto relationships, specific criteria determine when the PRA's provisions regarding property rights begin to apply.
What is a De Facto Relationship?
For the purposes of the PRA, a de facto relationship is a relationship between two people (whether of the same or different sex) who live together as a couple in the nature of marriage or civil union [Source: Property (Relationships) Act 1976, s 2D(1)]. The Act provides a list of factors to consider when determining if a de facto relationship exists, including:
- The duration of the relationship.
- The nature and extent of common residence.
- Whether a sexual relationship exists.
- The degree of financial dependence or interdependence, and any arrangements for financial support between the parties.
- The ownership, use, and acquisition of property.
- The degree of mutual commitment to a shared life.
- The care and support of children.
- The performance of household duties.
- The reputation and public aspects of the relationship [Source: Property (Relationships) Act 1976, s 2E(1)].
No single factor is determinative, and the court considers all the circumstances of the relationship [Source: Property (Relationships) Act 1976, s 2E(2)].
When Do Property Rights Apply? The General Rule
Generally, the PRA applies to a de facto relationship only if the partners have lived together in the de facto relationship for at least three years [Source: Property (Relationships) Act 1976, s 1N(1)(b)]. This three-year period is often referred to as the 'qualifying period' or 'threshold period'. Once this period is met, the property division principles of the PRA generally apply as if the couple were married or in a civil union.
Exceptions to the Three-Year Rule
The PRA can apply to de facto relationships of shorter duration than three years in specific circumstances. The Act's provisions regarding relationship property may still apply if:
- There is a child of the relationship; or
- One partner has made a substantial contribution to the de facto relationship [Source: Property (Relationships) Act 1976, s 1N(1)(b)(i), (ii)].
In either of these situations, the court must be satisfied that failing to make an order under the PRA would result in serious injustice [Source: Property (Relationships) Act 1976, s 1N(1)(b)]. If these conditions are met, the court has the discretion to make orders regarding the division of relationship property even if the three-year qualifying period has not been met.
What is Relationship Property?
Relationship property generally includes most property acquired by either partner during the de facto relationship. This can include the family home (even if acquired by one partner before the relationship began, provided it was used as a family home), bank accounts, investments, superannuation, and most assets obtained while the partners were together [Source: Property (Relationships) Act 1976, s 8].
Separate property is generally property acquired by one partner before the relationship began, or by gift or inheritance during the relationship, provided it has not become intermingled with relationship property or used for the benefit of the relationship [Source: Property (Relationships) Act 1976, s 9].
Equal Sharing Principle
When a de facto relationship ends and the PRA applies, there is a general presumption that relationship property will be divided equally between the partners [Source: Property (Relationships) Act 1976, s 11(1)]. This presumption can only be departed from in specific circumstances, such as when extraordinary circumstances exist that make equal sharing repugnant to justice [Source: Property (Relationships) Act 1976, s 13].
Contracting Out Agreements
Partners in a de facto relationship can enter into a contracting out agreement (also known as a pre-nuptial or relationship property agreement) at any time, including before or during the relationship. This agreement allows them to decide how their property will be divided, regardless of the provisions of the PRA [Source: Property (Relationships) Act 1976, s 21(1)]. For such an agreement to be valid and binding, both parties must receive independent legal advice before signing, and their signatures must be witnessed by a lawyer [Source: Property (Relationships) Act 1976, s 21F].
When to Seek Independent Legal Advice
Navigating the complexities of de facto relationship property rights can be challenging. Individuals involved in or considering a de facto relationship where property is a concern are encouraged to seek independent legal advice. Community Law Centres across New Zealand offer free legal advice and can provide guidance on these matters. The Ministry of Justice also provides information on relationship property.