The Property (Relationships) Act (PRA) is the New Zealand statute which sets out the law under which property owned by couples is divided when they separate. For information about how the PRA applies when one partner dies see relationship property and death. The PRA also sets out options for how parties can divide their property by agreement before, during and after their relationship ends.
The PRA applies to you and your partner if you were:
What is relationship property?
Property which you and or your partner own is either relationship property or separate property depending upon the how the property is classified under the PRA. Under the PRA relationship property is divided equally.
The family home and family chattels are always relationship property no matter whose name they are in or how they were acquired.
Other assets will usually be relationship property if the circumstances in which the asset was bought, used, created or otherwise mixed up with other relationship property means that both partners have a common association with the property. That means that, in addition to the family home and chattels, relationship property usually includes things like:
For answers to questions including who gets the dog click here.
If it’s not classified as relationship property under the PRA the property is separate property. Ownership of separate property stays with the partner who owns it unlike relationship property which is divided equally. Separate property includes things like:
For examples of situations where separate property becomes relationship property including where inherited property is involved click here.
Increases in value and income from separate property can potentially become relationship property where the increase in value is attributable to the application of relationship property or the efforts of the non-owning partner.
For examples of situations where increases in value of property get shared and don’t get shared click here.
The PRA provides for relationship property to be divided according to the contributions of the partners to the relationship instead of on a 50/50 equal sharing basis in a number of situations. These include where there are extraordinary circumstances or the relationship lasts for less than three years and there is a child of the relationship or the applicant has made a substantial contribution to the relationship, and the Court is satisfied that it would be unjust not to make an order under the PRA.
If property is divided according to the contributions of the partners to the relationship, both financial and non-financial contributions are taken into account including:
All forms of contribution are given equal worth and are considered globally. That means that it doesn’t matter whether any particular form of contribution happens to produce or create an item of property.
Under the PRA debts are classified as either relationship debts or personal (separate) debts in the same way that property is either relationship property or separate property. Some debts (eg a bank overdraft or student loans) may be partly a relationship debt and partly a personal debt. The responsibility for relationship debts is shared but personal debts remain the responsibility of the partner who incurred them.
Examples of relationship debts are:
school fees.
Personal debts are those incurred to acquire or improve separate property or those incurred before the relationship began or after it ended. Even though a debt may be in one partner’s name only (say on one partner’s credit card), that doesn’t mean it’s a personal debt – it will depend on the purpose for which it was incurred.
Under the PRA one partner can be entitled to receive compensation where the relationship property pool has been reduced because relationship property has been used to pay a personal debt of the other partner during the relationship.
The good news is that in the vast majority of separations, partners are able to reach agreement on how their property should be divided. If you and your partner have agreed about how your property should be divided a relationship property lawyer will be able to draft a binding agreement under the PRA for you both to sign. In order to be binding you and your partner will need to each receive independent advice from a relationship property lawyer who will certify that you have had the law explained to you and that you understand the terms of the agreement.
If you can’t agree about how your property should be divided it’s time to see a relationship property lawyer. That may not sound like good news but good relationship property lawyers (and there are plenty of them out there) should be focused on ensuring that:
Hiring a relationship property lawyer doesn’t automatically mean you’re going to Court. In the vast majority of relationship property disputes where a relationship property lawyer is involved the disputes are settled by agreement without the involvement of the Court.
This situation is difficult but not uncommon. This is usually the right time to have your relationship property lawyer issue a proceeding in the Family Court. It’s often a false economy for your relationship property lawyer to keep sending letters, and for you to keep sending emails and texts. The wheels of justice turn slowly meaning that Family Court proceedings take time to wend their way through the system. Therefore, getting proceedings underway early often provides a useful backdrop against which continued attempts at negotiation can be made while steadily increasing the opportunity for the Court to decide the dispute if no agreement can be reached.
If Court proceedings are issued know that the vast majority of relationship property Court proceedings settle without going to a full hearing.
For further information about relationship property see my articles on relationship property and trusts and departures from equal sharing where during the relationship one partner stays at home to look after the kids.
Divorce disputes often bring from the shadows to the light issues around family violence. Family violence isn’t limited to physical violence. It includes financial or economic abuse including by denying or limiting access to money. For further information about family violence and obtaining protection and property orders click here.
