Do you own a home?

Are you living in that home with your partner or spouse?

Has your relationship lasted 3 years or more?

If you answered yes to these questions, then your home is the family home under the Property (Relationships) Act 1976 (the Act).  If your relationship ends (either if you separate or one of you dies) you and your spouse or partner are both entitled to half the family home.  It doesn’t matter if you paid for the home yourself or owned it before your relationship began.

This applies equally to your family chattels which include all the furniture in your home and all vehicles, caravans, trailers and boats which you use together.  Again, it doesn’t matter how these chattels were paid for or if they were owned by you before your relationship began.

If this is not what you or your spouse or partner want to happen in your relationship, you can sign an agreement which sets out your wishes. These agreements contract out of the Act which would otherwise govern what will happen to your relationship property if your relationship ends. These agreements are often called Contracting Out Agreements or Section 21 Agreements, being the section of the Act under which they can be signed.

The best time to put an agreement in place is at the beginning of your relationship and preferably before the three year anniversary of your relationship.

Agreements are commonly signed when:

• a young couple are in a new relationship where one partner already owns a house, or they buy a house together and want to contribute unequal amounts to the purchase.
• an older couple go into a new relationship and they want to preserve what they worked for or acquired from an earlier relationship.

If property is inherited, this needs to be kept separate if it is to remain separate property. This can be done by investing it in an account solely in your own name.  If inherited money is used to buy the family home or reduce a mortgage on the family home, a Contracting Out Agreement is needed to keep that money separate.

For an agreement to be valid and enforceable:

• It needs to be in writing.
• You need to be independently advised by a lawyer.
• Your lawyer has to certify they have advised you of your rights under the Act.

Gifts or loans from Parents

It is increasingly common for parents to lend or give their children money towards the purchase of a first home. If the child is in a relationship when that loan or gift is made, then that home will be the relationship home. If parents gift money, then that gift will automatically become relationship property and will be shared equally if the couple separate after they have been together for three years.  Gifts can be protected in a Contracting Out Agreement. Loans can be protected by ensuring they are properly documented in a written loan agreement at the time the loan is made.

We are happy to help – please contact one of our Family Team on
03 377 2900 / law@mmlaw.co.nz)