Relationship Property Agreements
Drafting legally binding contracting-out (pre-nuptial) agreements under the Property (Relationships) Act 1976. Protect separate property and secure independent legal certifications.
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Under Section 21D of the Property (Relationships) Act, a contracting-out agreement is **void and unenforceable** unless both partners use different law firms.
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The Property (Relationships) Act 1976 (PRA)
The 3-Year De Facto Rule
In New Zealand, once a marriage, civil union, or **de facto partnership** has lasted for 3 years, the Property (Relationships) Act 1976 applies. Under this Act, all relationship property is split **50/50** upon separation.What is "Relationship Property"?
This includes the **family home** (regardless of who bought it, when it was purchased, or whose name is on the title), family chattels, vehicles, bank accounts, and superannuation/KiwiSaver funds accumulated during the relationship.Contracting-Out Agreements (Section 21)
The only way to modify this default statutory division is by signing a **Contracting-Out Agreement** under Section 21 of the Act. Often called a "pre-nuptial agreement," this legal deed defines exactly what is "separate property" (retained by individual partners) and what is shared.
These agreements are crucial when one partner contributes a larger deposit for a home purchase, holds pre-existing commercial shares, or has trust assets they wish to protect.
PRA Default Division vs. Contracting-Out Agreement
| Asset Category | Default PRA 50/50 Division | Contracting-Out Agreement Options |
|---|---|---|
|
The Family Home |
**50/50 split**, regardless of who paid the mortgage or supplied the deposit. | **Deposit Ring-Fencing**. Initial contributions returned first; equity growth split equally or proportionally. |
|
Pre-Relationship Cash |
If commingled or used to buy relationship assets, it is split **50/50**. |
Declared as **Separate Property** and remains protected in separate accounts. |
|
Family Trust Assets |
Subject to **court clawbacks** if trust assets are used to service relationship lifestyles. |
Explicitly excluded from relationship pools. Both parties acknowledge trust integrity. |
|
Inheritances / Gifts |
Generally separate, but becomes relationship property if used to pay the family mortgage. |
Remains separate, regardless of whether it is applied to the family home or commingled. |
Section 21 Agreement Validity Checklist
For a contracting-out agreement to be legally valid and protect assets, all statutory conditions under the PRA must be met:
| Validity Condition | Statutory Requirement & Meaning | Non-Compliance Consequence |
|---|---|---|
|
Written Document |
The agreement must be in writing and signed by both parties. Verbal agreements hold no legal status. |
**Void** |
|
Independent Advice |
Each partner must receive independent legal advice from separate, unrelated law firms. |
**Void** |
|
Solicitor Witnessing |
The advising solicitor must sign the certificate attached to the deed, certifying they explained the effect. |
**Void** |
| Signed Certification | The advising solicitor must sign the certificate attached to the deed, certifying they explained the effect. |
**Void** |
Can a Court Overturn a Signed Agreement?
Serious Injustice Rulings
Even if an agreement satisfies all Section 21 formalities, the court holds the statutory power to set the agreement aside under Section 21J if it would result in serious injustice.
Identifying Serious Injustice: Courts consider the length of the relationship, children's welfare, whether the agreement has become unfair over time due to changes in circumstances (e.g. one partner becoming disabled or leaving work to care for children), and the degree of disparity between partners' shares.
Regular Reviews: To minimize this risk, we recommend writing review clauses into the agreement, prompting couples to update their terms every 5 years or upon the birth of a child.
Minimizing Serious Injustice:
- - **Include Review Clauses**: Trigger updates upon birth of children or property sales.
- - **Fair Distribution**: Avoid leaves-with-nothing clauses for long relationships.
- - **Full Asset Disclosures**: Complete schedule of all assets and liabilities.
- - **Separate Trusts Alignment**: Ensure trust deeds match the Section 21 terms.
Instruct Our Relationship Property Solicitors
Ensure your assets are protected under the Property (Relationships) Act. Draft contracting-out deeds, ring-fence property deposits, or secure independent certifications. Request a consultation today.
Request an Agreement ConsultationFrequently Asked Questions
The ideal time to sign is **before you buy a home together**, or well before reaching the **3-year cohabitation/de facto threshold**. Signing early ensures terms are agreed upon when relations are positive, and before automatic 50/50 joint ownership rights trigger under the Act.
Courts determine if a de facto relationship exists by looking at all circumstances. These include the duration of the relationship (usually 3 years), whether you live in the same home, share financial support or bank accounts, have a sexual relationship, have children, own assets together, and how you present your relationship to family and friends.
This is a strict statutory requirement under Section 21D of the Property (Relationships) Act. To prevent one partner from pressuring the other or hiding assets, both parties must receive independent, objective legal advice on the advantages and disadvantages of signing the agreement. Without certifications from two separate firms, the agreement is legally void.
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