What is Relationship Property?

By Hayley Boud

What is relationship property?

Section 8 of the Property (Relationships) Act 1976 (“Act”) defines relationship property.  Here is a summary:

  1. The family home whenever acquired (even if acquired prior to the relationship);

  2. The family chattels whenever acquired;

  3. All property owned jointly or in common in equal shares by the couple;

  4. All property owned by either partner immediately before the marriage or de facto relationship began if:

    The property was acquired in contemplation of the marriage or de facto relationship; and

    The property was intended for the common use/benefit of both partners.

  5. All property acquired by either partner after the marriage or de facto relationship began (with some exceptions);

  6. Life insurance;

  7. Property insurance;

  8. Superannuation including KiwiSaver;

  9. Property that is included in a relationship property agreement; and

  10. Income.

What is separate property?

Property owned before the marriage or de facto relationship except the family home or family chattels is considered separate property e.g. a rental property.  The sale of such property is also considered separate property.  Inheritance is also considered separate property.  However, where separate property is mixed with relationship property, things become more complicated.  There are also exceptions to the rules.

 Exceptions to the rules

Property that is acquired for the common use or benefit of both the husband and wife such as a beach bach or a boat will be classified as relationship property.

Increases in value of separate property and any income derived from such property is considered relationship property.  For example, a wage or salary paid by a separate property business is relationship property.  However, profits returned back into the business will remain separate property.  Other examples of relationship property from separate property gains include:

  • Rental from separate property. 

  • Interest from separate property. 

  • Progeny from separate livestock.

 What happens when my separate property is mixed with relationship property?

Mixing relationship property with separate property will usually make the separate property become relationship property unless the contribution of relationship property is so minor as to be disregarded.

Bank accounts that hold a blend of separate property and relationship funds will become relationship property.  The onus is on the party claiming it is separate property to prove that it is separate. 

 Inheritance that is used to pay the family home mortgage will become relationship property. 

 Paying a mortgage on a separate property with wages means the separate property will become relationship property.  E.g. Using wages to pay the mortgage on a rental property.

 Pre-nup

What you might consider as separate property could turn out to be considered in New Zealand law as relationship property.  This could give a shock if you separated or for your estate if you passed away before your partner.  The best way to deal with this is to enter into an agreement contracting out of the Act (known as a pre-nup or contracting out agreement). 

 For more information please feel free to contact Hayley Boud on 07 839 7632 or hayley@ghlaw.co.nz