Changes proposed for law dictating how property split in break-up

Thursday, 1 November 2018

The Law Commission says the rules are out of date.

Big changes to the way relationship property is dealt with when a couple separates have been proposed by the Law Commission.

The commission has published proposals to reform the Property (Relationships) Act.

It sets out the rules for dividing property when a relationship disintegrates.

Last year, the Law Commission published an issues paper and invited public comment. It has now published a preferred approach paper, asking for feedback.

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Children's needs should be given higher priority when a couple separated, the commission said.

It suggests that the family home should no longer always be shared 50/50. If one partner owned the house before the relationship began, only the increase in value during the relationship should be shared.

Homes bought during the relationship would still be shared equally.

People who had children, had been together for 10 years or more, or who had built or sacrificed careers because of the relationship should be eligible for family income sharing arrangements or 'FISAs', the commission's paper said.

The Law Commission says if one party owned a house before the relationship began, only the increase in value should be split.

'Under a FISA, the partners would be required to share their combined income for a limited period after they separate, to ensure the economic advantages and disadvantages from the relationship are shared more fairly.'

That would be dependent on how long the couple had been together, to a maximum of five years.

It also said a court should have greater powers to share trust property when a trust holds property that was produced, preserved or enhanced by the relationship.

'The rules should continue to apply to all marriages, civil unions and de facto relationships lasting three years, unless the partners enter into a contracting out agreement. Partners should still be entitled to share equally in all relationship property, subject to limited exceptions.'

The commission said children's best interests should be given higher priority, including giving the primary caregiver of children a default right to stay in the family home in the period immediately following separation.

It also called for a range of measures to promote the just and efficient resolution of PRA matters and to address behaviour that causes delay and increases costs. 'This includes making sure partners properly disclose to each other all relevant information about their property, whether or not they go to court.'

'Dividing property when relationships end is often a challenging task, and one which typically comes at a time of emotional upheaval. Partners should be helped at this time by a law that is clear and that accords with what most New Zealanders would think is fair,' said Commissioner Helen McQueen.

'We have developed a package of reforms that we think reflects those expectations and updates the law for contemporary New Zealand.'

She said people often talked about wanting a 'clean break' but that was not possible in situations where there were children involved or where one partner had made significant sacrifices for the good of the relationship.

'The idea of a clean break is ridiculous. You can't have a clean break at the expense of fairness.'

Efforts to allow courts to allocate an uneven distribution of property to address disparity had not succeeded, she said. 'It's a disaster, it takes far too long, it's uncertain and the costs involved are significant.'

She said the law was out-of-date and no longer reflected New Zealanders' values and attitudes.

While the project had been commissioned by the former government, she said there seemed to be wide support for change.

Consultation is open for six weeks before the Law Commission prepares its final report.