Review of the Property (Relationships) Act 1976

This project examined New Zealand’s relationship property legislation.

The Property (Relationships) Act 1976 (PRA) set out the rules for how property owned by either or both partners is divided when they separate or when one of them dies. It applied to marriages, civil unions and de facto relationships. The policy of the PRA is the just division of property, and this policy is given effect primarily through the general rule that each partner is entitled to share equally in “relationship property”, subject to limited exceptions.

When first passed, the PRA was seen as a significant and long-awaited step in the development of relationship property law in New Zealand. However, the PRA is now over 40 years old and in that time New Zealand has undergone a period of significant social change.

The Law Commission was asked to review the PRA to determine whether it is still operating appropriately and effectively.

The Property (Relationships) Act 1976 ("the Act") created a code which governs the division of property held by married couples, civil union couples and couples who have lived in a de facto relationship when they separate or one of them dies.
The Act was amended in 2001 and 2005 to extend its application to civil unions and de facto partnerships but has not been comprehensively reviewed since its inception. Over time the Act affects almost every New Zealander, both adults and children, and as such it should be reviewed to ensure that it is operating appropriately and effectively.

The Law Commission's review of the Act will include (but not be limited to) the following matters:

1. The definitions of property, relationship property, and separate property;
2. How a de facto relationship is defined for the purposes of the Act;
3. Differences in the rules governing de facto relationships and marriages/civil unions;
4. Whether the Act gives rise to matters of particular concern to Māori and how these should be addressed;
5. How the interests of children are recognised and protected under the Act and in how it is applied;
6. How the Act functions in relation to sequential relationships and blended families;
7. The ability to make adjustments to take account of economic disparity between spouses and partners, and other departures from equal sharing as contemplated by the Act;
8. The operation of Part 5 of the Act concerning relationship property and creditors;
9. How the Act deals with property held by a company or trust and the powers of the courts in this area;
10. The relationship between and application of the Act and section 182 of the Family Proceedings Act 1980;
11. The provisions relating to contracting out and settlement agreements;
12. The provisions relating to division of property on death;
13. The requirements for disclosure of information in relationship property matters and the consequences for failing to disclose;
14. The jurisdiction of the courts over relationship property matters and the range of orders the courts can make;
15. Whether the Act adequately deals with cross-border issues;
16. Whether the Act facilitates the resolution of relationship property matters in accordance with the reasonable expectations of the parties.

The Law Commission will consult with experts, stakeholders, and the general public.

Relationships and families in contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017)

The Law Commission published this Study Paper alongside our Issues Paper, Dividing Relationship Property – Time for Change? Te mātatoha rawa tokorau – Kua eke te wā? (NZLC IP41, 2017). Social legislation such as the Property (Relationships) Act (PRA) cannot be reviewed without understanding its context.

This Study Paper described the significant demographic changes that have taken place in New Zealand since the PRA was first passed in 1976 and explored changing patterns of partnering, family formation, separation and re-partnering.

Dividing Relationship Property – Time for Change? Te mātatoha rawa tokorau – Kua eke te wā? (NZLC IP41, 2017)

In this Issues Paper, the Commission asked whether the Property (Relationships) Act 1976 (PRA) was still achieving a just division of property at the end of a relationship 40 years after the PRA was passed.

The Issues Paper was divided into 13 parts and sought feedback on a wide range of issues.

The Commission also prepared a Consultation Paper, which summarised the key issues identified in the Issues Paper. 

Review of the Property (Relationships) Act 1976: Preferred Approach - Te Arotake i te Property (Relationships) Act 1976: He Aronga i Mariu ai (NZLC IP44, 2018)

In this Preferred Approach Paper, we concluded that reform is required to ensure that the law meets most New Zealanders' expectations of fairness when a relationship ends. We presented a package of key reforms that we proposed to recommend to the Government subject to any feedback received. These proposals were informed by the extensive feedback we received during consultation on the Issues Paper, Dividing Relationship Property – Time for Change? Te mātatoha rawa tokorau – Kua eke te wā? (NZLC IP14, 2017). We also had the benefit of the results of a survey of public attitudes and values on relationship property division.[1]

[1] I Binnie and others Relationship Property Division in New Zealand: Public Attitudes and Values – A general population survey (Michael and Suzanne Borrin Foundation, Technical research report, October 2018).

Review of the Property (Relationships) Act 1976 – Te Arotake i te Property (Relationships) Act 1976 (NZLC R143, 2019)

On 28 June 2019 the Law Commission completed its review of the Property (Relationships) Act 1976 and submitted its Report to the Minister responsible for the Law Commission. The Report was tabled in Parliament on 23 July 2019.

The Commission has concluded that while fundamental aspects of the law remain sound, such as the general rule of equal sharing and its application to marriages, civil unions and de facto relationships that last for three years or more, other aspects of the law are no longer fit for purpose. Some significant changes are required to make the law fairer for partners dividing property on separation.

The Report makes 140 recommendations for reform that cover a wide range of topics. The Commission’s key recommendations include:

• Introducing a new statute, the Relationship Property Act. This should be the principal source of law applying to the division of property when relationships end on separation.
• Changing how the family home is classified. Currently the family home is always treated as relationship property and usually divided equally, regardless of when or how it was acquired. Under our recommendations, 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.
• 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 three year duration requirement before the law applies to them. We recommend changes that will it make easier for de facto partners to know when their relationship is subject to the Relationship Property Act.
• Introducing Family Income Sharing Arrangements (FISAs). FISAs would replace both the court's compensatory powers under section 15 of the PRA and maintenance under the Family Proceedings Act 1980. Under a FISA, partners would share income for a limited period following separation in order to ensure the economic advantages and disadvantages arising from the relationship or its end are shared more fairly. The amount and duration of a FISA should usually be calculated by a formula that takes into account the partners' incomes before separation and the length of the partners' relationship.
• Giving a 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.
• Giving children's best interests greater priority in relationship property matters. This should include greater rights to occupy the family home in the period immediately following separation.
• Improving the way relationship property matters are resolved in practice. Our recommendations are designed to promote the just and efficient resolution of relationship property matters and address behaviour that causes delay and increases costs.

The Commission also recommends that the rules that apply to relationships ending on death should be subject of further consideration within a broader review of succession law. The Commission recommends that the Minister Responsible for the Law Commission ask the Law Commission to undertake that review as a matter of priority.  

The Minister’s media release: Justice Minister tables Law Commission Report of Property (Relationships) Act 1976

The Government responded to our report Review of the Property (Relationships) Act 1976 – Te Arotake i te Property (Relationships) Act 1976 (NZLC R143) on 27 November 2019. The Government acknowledged Te Aka Matua o te Ture | Law Commission’s assessment that the Property (Relationships) Act 1976 is no longer fit for purpose for 21st century New Zealand. The Government accepted the Commission’s recommendation that the property division rules applying to relationships ending on death be examined separately, within the context of a broader review of succession law, and referred a review of succession law to the Law Commission. The Government’s response in relation to the remaining recommendations in R143 was to consider these concurrently with consideration of the succession law review.

In November 2021, the Commission completed its review of succession law and subsequently published R145 He arotake i te āheinga ki ngā rawa a te tangata ka mate ana | Review of succession law: rights to a person’s property on death. On 15 June 2022, the Government responded to R145. The Government accepted in-principle that reform, including new legislation, is required for the laws relating to the division of property upon separation and the distribution of property upon death. The Government considered these reforms could better enable the law to recognise a more diverse range of family structures and relationships.

The Government said that it will need to take the time to work through the policy detail of implementing many of the Commission’s comprehensive recommendations on both relationship property and succession law. The Ministry of Justice will consider the Commission’s recommendations and any additional policy work required to reform and modernise the law in these areas. It expects the Ministry’s work to achieve these reforms will take a period of years and will need to be balanced against other Government priorities.