Law Commission’s Review of Relationship Property

Nov 29, 2020

A complete overhaul of relationship property legislation is likely to come after the Law Commission completed its review of the Property (Relationships) Act 1976 (PRA). This review was aimed at exploring New Zealand’s relationship property legislation to discover if it is still operating effectively and justly.

The PRA was originally drafted in 1976. It is applicable to marriages, civil unions and de facto relationships and is used to devise how property, owned by either partner, is divided in the case of separation or death. The general rule being that property is divided equally between the partners (subject to exceptions).

In the 40 years since the Act was initiated, New Zealand’s society has undergone significant social change and, as such, the PRA needed to be reviewed. Some of the key recommendations are below:

Relationship Property

One of the key themes throughout the review was how dissatisfied people felt that property acquired before the start of a relationship was still classified as “relationship property” and could be divided equally if the relationship ended. To address this the Law Commission recommended altering the definition of relationship property, so that property could only be classified as relationship property if:

1)    It was purchased by either partner for the partners’ common use or benefit; or

2)    It was purchased by either partner during the relationship.

Simplifying the Eligibility Criteria

Another area of interest was in the definition of de facto relationships. While the law commission deemed that the time frame of 3 years or more was adequate to determine a relationship, they acknowledged that the definition of a de facto relationship did not provide adequate guidelines. To address this the commission amended a de facto relationship to be:

A relationship between two people, where they have maintained a common household for a period of 3 years.

If a couple have been in a de facto relationship but have not shared a common household for a period of 3 years or more, then they should only be subject to the new Act if they meet additional requirements.

Family Income Sharing Agreement (FISA)

Section 15 of the Act allows the court to compensate one partner when there is a significant disparity in income and living, due to the divided functions of the relationship. The Law Commission has determined that this section of the Act has been ineffective and is primarily due to inconsistent methods adopted by the courts in determining advantage and disadvantage. In place of section 15, the Law Commission suggested the introduction of Family Income Sharing Arrangements (FISAs) where by partners would be required to share income for a limited time after separation and one of the partners could be entitled to FISA if they have experienced economic disadvantage resulting from the relationship (subject to criteria).

More information about the Law Commissions review about FISA, please click here.

If you and your partner are separating, or have already separated, it is important to obtain legal advice as soon as possible so you can make informed decisions. If you would like to discuss any aspect of relationship property, please contact us.