Making the decision to live with your partner is an exciting
time. It is a big step, not just emotionally, but also legally.
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. This is not always
the case. The law allows parties in de facto relationships of less
than three years to 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 movies into your house, you
could be putting your house at risk. This can also occur where 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
contracting out agreements ("COA") before he or
she moves in. Yes, this can be awkward to discuss with your partner
and yes, it does cost money. However, it is the only way to protect
your assets from future claims in the event you separate or
Our advice - spend some money now to get the a COA in place.
We have also seen situations where couples have 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 provides that:
- The COA must be in writing;
- Each party to the COA must have independent legal advice before
signing (ie: separate lawyers);
- The signature to each party must be witnessed by a lawyer;
- 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 rights time could
potentially save you thousands later down the line.