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Although the Law Commission made recommendations to make relationship property law fairer in New Zealand, the Government has decided to put reforms on hold.  While the Government acknowledged that the law was no longer fit for purpose, it stated it would not act at this time. 

Last year, the Law Commission reviewed the Property (Relationships) Act 1976, consulting members of the law profession and other groups.  It made 140 recommendations relating to the Act.  The most significant recommendation was that the family home should no longer be divided equally after 3 years regardless of when the home was purchased.  Other recommendations included a proposal for family income sharing agreements, greater powers for courts in relation to trust property, giving the interests of children the primary consideration, and making court processes faster and more efficient.

I consider it a real shame that these reforms must wait.  The law at present is extremely unfair for those that already owned a home prior to the relationship.  Under the current law, this home is automatically divided equally between the couple upon living together in the home for 3 years.  The proposed changes would change that.  Instead, the couple would divide the increase in value of the home during their relationship.  This makes much more sense is a lot fairer than the current law.  It would require couples obtaining valuations of the home at the beginning and at the end of the relationship.

It is also a real shame that the court system is still so slow.  Presently, it takes around 14 months from the date of filing the application in court to resolution.  Law reform is 100% recommended in this area.  The delay only leads to costing applicants more legal fees and stress.

It is also shameful that children are not the primary concern under current law.  Changes in this area are required because children are often significantly impacted by the separation of parents.  The Law Commission recommended that minor children should be able to stay in the family home with the primary caregiver for a reasonable period after separation.

Presently, New Zealand relationship property law is not fair or relevant when considering the massive changes in family life since 1976 when the Act was enacted.  Our lives are far more complicated today than the Act provides for.  The Act is now completely out of date.  Then there is trust property which really complicates the issue. 

Furthermore, the law does not provide an easy or cost-effective solution to resolving separation disputes.  Very often, the cost of taking the matter to court far outweighs the relationship property assets.  Sadly, the ones who suffer the most are the children.

I always encourage clients to agree on the division of relationship property without going to court but sometimes the other party just won’t engage.  In these cases, clients have no option in New Zealand but to go to court.  I wish there was another option such as a disputes tribunal set up for relationship property or a mediation service. 

Currently, the only way around the unfairness of the Property (Relationships) Act is a Contracting Out Agreement (pre-nup).  Yet, only 8% of people sign one.  Until the government makes the relevant changes, I recommend entering into a pre-nup to ensure your assets that you have worked hard for are protected from a relationship property claim.  It is also recommended because you will save time and money in the long run should the relationship end because you have already decided together how to divide your assets.