Big changes coming for relationship property

The Law Commission has concluded the Property (Relationships) Act 1976 (PRA) is out-of-date and in need of reform.

Nichola Lambie

John Luke Day

Nichola Lambie & John-Luke Day

In its report Review of the Property (Relationships) Act 1976 – Te Arotake i te Property (Relationships) Act 1976, recently tabled in Parliament, the commission recommends repealing the PRA and introducing a new Act to govern how partners in a relationship should divide property when they separate.

The report contains 140 recommendations for change. They are the result of a three-year review during which the commission published an issues paper and a preferred approach paper, and did two consultation rounds.

It heard from more than 400 members of the public, organisations, lawyers, academics, judges and other experts.

The commission also relied on a survey of public attitudes and values on relationship property division conducted by the University of Otago, with support from the Michael and Suzanne Borrin Foundation.

Many of the commission’s recommendations respond to the social change New Zealand has experienced since the PRA was first enacted 43 years ago.

Changing patterns of partnering, family formation, separation and re-partnering have shaped public attitudes and affect what constitutes a just division of property on separation.

The commission’s report presents a package of reforms designed to make the law more responsive to the wide range of different family situations existing today.

Although the commission favours retaining several familiar rules, such as the equal sharing of relationship property and its application to marriages, civil unions and de facto relationships that last for three years or more, it proposes significant change in other areas.

Those changes include:

  • Changing what property should be relationship property. In particular, if the family home was owned by one partner before the relationship began or was received as a third-party gift or inheritance, only the increase in the value of the home during the relationship should be shared on separation.
  • Simplifying the eligibility criteria. The law should apply in the same way to all marriages and civil unions, and de facto relationships that meet certain requirements. Most de facto relationships would still need to satisfy a threeyear duration requirement before the law applies to them. The commission recommends changes that will make it easier for de facto partners to know when their relationship is subject to the Relationship Property Act.
  • Giving the Family Court greater powers to divide trust property. These powers should apply when a trust holds property that was produced, preserved or enhanced by the relationship.
  • Introducing Family Income Sharing Arrangements (or FISAs) to replace section 15 of the PRA and the maintenance regime under the Family Proceedings Act 1980. FISAs would require some partners to share income for a limited period following separation in order to ensure the economic advantages and disadvantages from a relationship are shared more fairly.
  • Giving children’s best interests greater priority in relationship property matters. This should include a new presumption in favour of a temporary occupation or tenancy order for the benefit of any minor or dependent child of the relationship, available to any person who is a principal caregiver of the child.
  • Improving the way relationship property matters are resolved in practice, to address behaviour that causes delay and increases costs. In particular, the commission recommends improving Family Court processes by creating new procedural rules and establishing a Family Court Rules Committee for this purpose.

The Law Commission recommends the new Act applies only to relationships ending on separation and that the division of property between a surviving partner and other parties that might stand to benefit from the deceased’s estate should be considered within a broader review of succession law.

The Minister responsible for the Law Commission, Andrew Little, has recently asked the Law Commission to begin such a review in 2019/20. The terms of reference are yet to be determined.

The government will now give further consideration to the commission’s 140 recommendations for reform and the wider impact of its proposals.

Nichola Lambie is the Law Commission’s principal legal and policy adviser, and John- Luke Day is a senior legal and policy adviser at the commission

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