The Property (Relationships) Act 1976 deals with how the property of married couples, civil union partners and de facto couples is divided when a relationship ends. The Act covers a relationship ending because of a break-up, but it can also cover a relationship ending because of the death of a spouse or partner.
The purpose of the Act is to recognise the equal contributions of both partners to their relationship and to provide for a just division of property when their relationship ends, taking into account the interests of their children. The general presumption of the Act is that a couple’s property will be divided equally between them. There are exceptions to this rule, however. In particular, there are different rules about how property is to be divided where a relationship has lasted less than three years.
Whether the rules in the Property (Relationships) Act 1976 apply to you and your ex-partner depends on the type of relationship it was and how long you were together.
In the first instance, it is up to the couple to decide how they will divide their relationship property. If they can agree on how they will divide the relationship property, then they can do this without having to follow the rules of the Property (Relationships) Act and without having to go to court.
However, any agreement must be in writing and must meet various legal requirements, including that the parties each get independent legal advice (see “Contracting out of the Property (Relationships) Act” below in this section).
The law relating to the division of relationship property is guided by these general principles:
The Act covers:
The Property (Relationships) Act applies both when a couple separates and when one of the partners has died.
An application under the Property (Relationships) Act to divide the property of a married couple or civil union partnership must be made within a year of the couple’s partnership being dissolved by a court order (see “Dissolution (divorce)” in this chapter) or, in the case of a de facto couple, within three years of the relationship ending.
For the purposes of the Property (Relationships) Act, a de facto relationship is a relationship between two people (whether of different sexes or the same sex) who are both aged over 18 years and are living together as a couple, but are not married to, or in a civil union with, each other.
When deciding whether two people are living together as a couple, a number of factors are taken into account:
Whether there is a de facto relationship in terms of the Property (Relationships) Act and if there is, on what date it began, will be questions of fact for the court to decide. If the court decides that two people are in a de facto relationship, there is then the question of what rules will apply to the division of their property. The Act will usually only apply to a de facto couple if they have been together for at least three years (see below “Short-term relationships: When the Act applies”, and see also in this section “Exceptions to equal sharing of relationship property / De facto relationships of short duration”).
Under the Property (Relationships) Act, a relationship of short duration is one that lasts for less than three years. In some circumstances, where the court considers it just, a longer relationship can also be considered to be “of short duration”.
Marriages and civil unions of short duration are covered by the Act, but special rules apply.
De facto relationships of short duration are usually not covered by the Act unless:
In circumstances where a relationship of short duration is covered by the Property (Relationships) Act, special rules apply to the division of the relationship property (see in this section “Exceptions to equal sharing of relationship property / Marriages and civil unions of short duration” and “De facto relationships of short duration”).
In terms of working out the length of the relationship, a de facto relationship that immediately precedes a marriage is treated as if it were part of the overall length of the marriage relationship.
Similarly, if a married couple were in a civil union before they got married or the other way round, the length of the relationship for the purposes of the Property (Relationships) Act is the total of both.
Property is divided into two categories, relationship property and separate property.
Relationship property is the property that must be divided between the parties when their relationship ends. Relationship property will usually include:
Note: Taonga and heirlooms are excluded from the definition of “family chattels” and so will usually be separate property rather than relationship property, but this will need to be decided on a case-by-case basis.
Separate property is the property of each spouse or partner that is not relationship property. The general rule is that separate property remains the property of the spouse or partner who owns it and does not have to be divided according to relationship property law.
Separate property includes:
Note: Gifts given by one spouse or partner to the other are not relationship property unless the gift is used for the benefit of both spouses or partners.
Separate property may become relationship property if it gets mixed with relationship property or used for family purposes. For example, separate property may become relationship property where it is used to acquire or improve relationship property.
Also, where the value of one spouse’s or partner’s separate property is increased by:
Debts are separated into two categories: personal debts and relationship debts.
Personal debts are the responsibility of the person who incurred them.
Relationship debts usually fall into one of the following categories:
The value of the relationship property that is available to be divided is the total value of the relationship property minus the relationship debts.
Note: Whether a student loan is a personal debt or a relationship debt will need to be decided on a case-by-case basis.
The general rule is that the property being divided under the Property (Relationships) Act is valued at the date of the court hearing. However, the court does have the discretion to set a different date for valuation if it thinks it is appropriate.
If there is any dispute about the value of property or household items, it is important for the parties to get independent valuations.
There is a fee of $700 for filing any relationship property application with the Family Court. If your case goes to a Family Court hearing in front of a judge, you will also have to pay an additional fee of $906 for each half-day (three hours) or part half-day (up to three hours). If either party chooses to use a lawyer, they will also have to pay their lawyer’s fees.
If you’re unable to pay the fee, you can apply to have it cancelled in your case (this is called a fee “waiver”). You’ll need to show that you’re dependent on a benefit or completely dependent on New Zealand superannuation or a veteran’s pension, or that you’d suffer “undue financial hardship” if you had to pay the fee.
There is a time limit for applications for orders under the Property (Relationships) Act:
If the couple cannot agree about how they will divide the relationship property, then one of them can apply to the Family Court for the property to be divided under the rules in the Property (Relationships) Act.
If the relationship has lasted at least three years, the general rule is that relationship property is divided equally between the couple.
If the relationship has ended, the shares of each spouse or partner in the relationship property are determined as at the date the relationship ended. If the couple are still living together, their shares in the relationship property are determined at the date an application for property division is made to the court.
Under the Property (Relationships) Act, the court must have regard to the interests of any minor or dependent children of the relationship. In doing this, the court can:
If a spouse or partner transfers relationship property to a trust and this has the effect of defeating the other spouse’s or partner’s claim under the Act, then the court can order compensation in one or more of the following ways:
In certain situations, the Family Court can depart from the equal-sharing rules for relationship property – for instance:
(These exceptions are discussed further below.)
The court can order an uneven division of relationship property where there are extraordinary circumstances that make equal sharing “repugnant to justice”. This means that equal division would be totally unfair to one of the spouses or partners. In this case, each person’s share is decided according to their contributions to the relationship (including non-financial contributions). The test is very stringent, and is only rarely met. The circumstances need to be exceptional to meet this test.
An uneven property division may be ordered when there is economic “disparity” between the spouses or partners at the end of a relationship, but only if the disparity is due to the “division of functions” within the relationship while the parties were living together.
Note: Economic disparity means that the income and living standards of one spouse or partner are likely to be significantly higher than those of the other spouse or partner.
“Division of functions” within the relationship refers to the way in which people organise their lives. For example:
If one partner has been economically disadvantaged by the “division of functions” within the relationship, the court can decide to make an uneven division of the relationship property by awarding a lump sum to one spouse or partner out of the other spouse’s or partner’s relationship property.
If the spouse or partner who is in the better economic position has also been able to increase the value of their separate property during the relationship (due to the division of functions within the relationship), the court can provide compensation to the other spouse or partner out of either relationship property or separate property.
In deciding about whether to order an uneven division of relationship property in the above situations, the court can consider:
Sometimes, at the time when a relationship begins, both spouses or partners might own a home capable of becoming the family home. But, at the time when the relationship property is to be divided, the home (or the proceeds of the sale of the home) of only one spouse or partner is included in the relationship property. In these cases, the court may adjust the division of relationship property to compensate for this. The court may also make an adjustment if one home was sold before the relationship began because the two parties were then planning to set up house together.
Where the value of one spouse’s or partner’s separate property is increased by:
then the increase in the value of the separate property is considered to be relationship property and is divided according to the contributions of each spouse or partner to the increase.
Where the separate property of one spouse or partner has been sustained by:
the court may increase the share of the other spouse or partner in the relationship property or order that they be paid compensation.
Where the separate property of one spouse or partner has been materially reduced in value by the deliberate action or inaction of the other spouse or partner, the court may reduce the share of the other spouse or partner in the relationship property.
For marriages and civil unions that last less than three years, the general principle is that equal sharing won’t apply to the family home and chattels if:
In these cases, the family home and chattels will be divided according to each spouse or partner’s contribution to the marriage or civil union.
For other relationship property, equal sharing applies unless one spouse or partner has made a clearly greater contribution to the marriage or civil union. In these cases, the relationship property will be divided according to each spouse or partner’s contribution to the marriage or civil union.
If a de facto relationship lasts for less than three years, the Property (Relationships) Act will usually not apply. Instead, the general rule is that the parties each take out what they brought into the relationship and retain the property that is in their own name. If one partner wishes to claim a share of the other’s property, this can only be done by applying to the High Court and arguing that there is a “constructive trust” in place.
However, the Property (Relationships) Act may still be used for a de facto relationship of short duration if:
If this is the case, the relationship property will be divided according to the contribution of each partner to the de facto relationship.
The Property (Relationships) Act also covers division of property when a relationship ends because a spouse or partner dies.
The surviving spouse or partner has to choose whether to apply for relationship property to be divided under the Act or whether to take what is left to them under the deceased’s will, if there is one, or under the intestacy rules in the Administration Act 1969, if there’s no will (see the chapter “Wills”).
If a surviving spouse or partner makes a claim under the Act, this takes precedence over any other person’s claim under inheritance law. This recognises that one spouse or partner should not be able to give away the other spouse’s or partner’s share of relationship property in their will.
A couple can choose to share their property differently than how the Property (Relationships) Act sets out. They can do this by making a contracting out agreement (sometimes known as a “prenuptial” agreement – or “pre-nup”) which says how they want to share the property. Using a contracting out agreement is the only binding way of dividing property if a relationship ends, other than going to court and having court orders made.
A contracting out agreement can be made at any time: upon entering a relationship, during it, or at the end of the relationship. Agreements are often used by couples entering a second or subsequent relationship later in life, especially if they already have substantial property which they wish to keep as their own separate property. It is, however, important that an agreement is made before the relationship or marriage/civil union has lasted three years, as entitlements will change at that time.
There are important requirements that must be complied with if the agreement is to be valid:
These requirements are designed to protect the people entering into a contracting out agreement, as an agreement has the same effect as a court order and cannot be easily set aside.
The court can only set aside a contracting out agreement if it would result in a “serious injustice”. For example, this might be where an agreement is very one-sided and doesn’t allow one partner to share in property acquired during the relationship.