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'Insuring' Your Relationship Property

'Insuring' Your Relationship Property

Written by:
Peter Fuscic

Section 21 of the Property (Relationships) Act 1976 ("the Act") allows for parties to essentially 'contract out' of the Act and determine how the relationship property would be divided on the off-chance that you and your partner separate.

If you have lived together with another person as a couple for more than three years you would likely be classified as a 'de facto' couple.  If you are in a de facto relationship or if you are married, your partner is automatically entitled to half of your personal and real property. This includes, but is not limited to, your: real estate, bank accounts, vehicles, chattels, shares, KiwiSaver, life insurance policies, etc.

Of course there are some exceptions that may apply, such as the contributions each partner has made throughout the relationship, the duration of the relationship, whether these assets have been intermingled within the relationship or whether you owned the relevant property prior to the relationship. Regardless, and rather unfortunately, there is no automatic protection granted and you could end up paying thousands of dollars in legal fees in Court because you did not seek legal advice early on in the relationship.

There is only one way to protect your assets and that is by getting a Section 21 Agreement, otherwise known as a Contracting Out Agreement ("COA"). A COA essentially protects your interests in the event that you and your partner do separate. It is merely a precaution and not something to stray away from or be scared of obtaining. Home ownership is getting more difficult to obtain and having such an agreement merely puts protections in place.  It would be like purchasing a home and deciding not to get insurance for it. You never expect anything bad to happen but if there was a fire and your house burnt down then at least you are covered.  This is exactly the same.

So what exactly is a COA? It is an agreement that is drawn up by a lawyer and you and your partner decide the terms and conditions of the agreement. For example, if you purchased a property prior to the commencement of the relationship, you may want to put into the agreement that if separation occurs, the property is your own separate property and your partner will not make a claim against it. Or, if you and your partner are wanting to purchase a property but you have more money to put into the deposit it may be that you want the agreement to say that if you separate you will both get back what you put into the property and share the increase in value. Other examples include wanting to protect your inheritance or any future property purchased. The COA will be shaped to fit you and your partner's circumstances and will reflect your wishes.

As COA's can, in certain circumstances be made void by the Court, it is important to get a lawyer with experience in relationship property law to draft the COA as they deal with Section 21 Agreements every day and know what agreements will and will not stand up in Court.  It is a requirement that the COA is in writing, that you both seek independent legal advice, are well informed of the consequences of signing the COA, and that neither party has been coerced into signing the COA.  It is also recommended that the COA is updated roughly every five years to ensure that the COA is up-to-date and can include any change of circumstances.

A COA can be an awkward conversation to have with a partner but a necessary one. At the end of the day you have worked hard for your assets and your partner should understand that you want to protect them in case the worst happens. No one ever wants to anticipate a break up with someone they love but a COA merely protects your ownership and allows for a clean-break at the end of a relationship. It could also save a lot of legal fees if you do separate.

Please direct any enquiries to:

Peter Fuscic on (09) 306 6746 (

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© McVeagh Fleming 2019

This article is published for general information purposes only.  Legal content in this article is necessarily of a general nature and should not be relied upon as legal advice.  If you require specific legal advice in respect of any legal issue, you should always engage a lawyer to provide that advice.  

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