What’s Mine Is Yours. But Is It Really?

Making the decision to live with your partner is an exciting time. It is a big step, but also requires some legal foresight.

The law in New Zealand creates a legal duty between boyfriends/girlfriends/partners who are in “de facto” relationships. A de facto relationship is where two people live together similar to a married couple. If a couple in a de facto relationship split, the default position under the law is that any relationship property is to be split 50/50.

Many people believe you have to live together for more than three years for your partner to have a claim, but that’s not always the case. Legally speaking, parties in de facto relationships of less than three years can make claims in certain circumstances.

Long story short – if you own a house in your personal name and someone you are in a relationship with moves in with you, you could be putting your house at risk. The same rings true if a couple buy a property together, but one person puts in significantly more money towards the property than the other.

Not all property is treated as relationship property, but where a couple live together in a house, that house can be classed as the “family home” and has greater risk of a claim.

Sadly, we see many people at the end of a relationship when the “other half” is now claiming half of the value of the house as relationship property. By that stage, it is usually too late to prevent a claim being made.

To avoid such a situation, you and your partner need to sign a contracting out agreement (“COA”) before you move in together. Many couples find this an awkward topic to discuss and yes, it does cost to have an agreement put in place. However, it is the only way to protect your assets from future claims in the event you separate or die.

We have seen situations where couples have tried to prepare their own agreement, but under the law, a “homemade” agreement will not be legally valid.

For a COA to be valid, the law states that:

1. The COA must be in writing
2. Each party to the COA must have independent legal advice before signing (ie: separate lawyers)
3. The signature of each party must be witnessed by a lawyer
4. The lawyer who witnesses the signature must certify before signing the agreement that he/she explained to the party the effect and implications of the COA.

Spending some money to get a COA at the right time, could save you thousands later down the line if things don’t work out.