Dividing your property when you split up (“Relationship property”)
Making your own agreement to divide your property: “Contracting out”
Can a couple contract out of the Property (Relationships) Act?
Property (Relationships) Act 1976, ss 21–21D
A couple can choose to share their property differently than how the Property (Relationships) Act sets out. You can do this by making a contracting out agreement (sometimes known as a “prenuptial” agreement – or “pre-nup”) which says how you 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.
When can a contracting out agreement be made?
Property (Relationships) Act 1976, s 21
A contracting out agreement can be made at any time: when you enter 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.
If you make an agreement after you’ve been together for three years or more (see: “Short term relationships: When the Act applies”), you might be giving up what you’d be entitled to under the Property (Relationships) Act. Your agreement might not be enforceable if you’d be giving up so much that it became unjust (see below).
What requirements must be met for a contracting out agreement to be valid?
Property (Relationships) Act 1976, ss 21F, 21J
There are set requirements to follow to make sure a contracting out agreement is valid:
- the agreement must be in writing and signed by both parties, and
- you both have to get independent legal advice before signing the agreement, from separate lawyers, and
- you both have to get your signatures witnessed by a lawyer, and
- the lawyer who witnesses each signature must certify that, before the person signed the agreement, the lawyer explained the effect and implications of the agreement.
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 can’t be easily set aside.
The court can only set aside a contracting out agreement if it would be very unfair (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.
