Many people are surprised to learn that they may already be in a de facto relationship in the eyes of New Zealand law, even if they have never formally defined the relationship. This legal status can have significant consequences for how property, assets and liabilities are treated if the relationship ends.
Why does it matter?
It is important to understand whether you are in a de facto relationship or not because once a de facto relationship has lasted three years (or two years if there is a child of the relationship), relationship property is generally subject to equal sharing. Critically, the equal sharing regime usually includes the home the couple lives in, even if that property was acquired by one partner before the relationship began and/or is in their sole name.
What is a de facto relationship?
Under the
Property (Relationships) Act 1976 (“the Act”), a de facto relationship exists when two people of any gender, who are both at least 18 and who are not married or in a civil union with each other, are living together as a couple. Although the term “living together” sounds simple, the law interprets it more broadly than many expect.
How the court decides if a de facto relationship exists
If there is uncertainty about whether a de facto relationship exists, or when it started, the Court considers a range of factors. These include the length of the relationship, whether the couple shares a home and a bedroom, whether the partners have a sexual relationship and how their financial affairs are arranged, including whether there is dependence or interdependence between them. The Court may also look at whether the partners own or use property together, whether they demonstrate a mutual commitment to a shared life, whether they care for children together, how household duties are divided and how their relationship is viewed by friends, family and the public.
No single factor is decisive. The Court has a wide discretion to weigh these circumstances and determine whether a de facto relationship exists based on the overall context.
De facto relationships of short duration
The Act can also apply to de facto relationships of short duration (i.e. less than three years). This may occur if the couple shares a child or if one partner has made a substantial contribution and the Court considers that a serious injustice would result. In these situations, property is divided according to each partner’s contributions rather than the equal sharing regime.
Polyamorous relationships
Although the Act defines a de facto relationship as being between two persons, the Supreme Court ruled in 2023 that polyamorous relationships can also fall within the framework of the Act. The Court confirmed that a polyamorous partnership may amount to a series of de facto relationships. In the case before the Court, three partners were involved in overlapping relationships, (two de facto relationships and one marriage) and their intermingling relationship property interests were subject to division under the Act.
Protect yourself – get a contracting out agreement
If you are in a de facto relationship, or think you may be in one, it is sensible to consider a contracting out agreement. This agreement can ring fence specific assets so they remain your separate property and can ensure you do not become responsible for your partner’s debt that you had no part in creating. It can also set out clear expectations as to how future property will be classified and how assets and liabilities will be divided if the relationship ends through separation or death.
