What is a contracting out agreement under New Zealand law?
A contracting out agreement is a legally binding written agreement under the Property (Relationships) Act 1976 that allows a couple — married, in a civil union, or de facto relationship — to opt out of the default equal sharing rules that would otherwise apply to relationship property. The agreement can specify how property will be divided if the relationship ends, including protecting assets brought into the relationship or received as gifts or inheritances.
What is the Property (Relationships) Act 1976 and when does it apply?
The Property (Relationships) Act 1976 (PRA) provides that most property acquired during a qualifying relationship is shared equally if the relationship ends after three years. The PRA applies to married couples, civil union partners, and de facto couples who have lived together for three or more years. Without a contracting out agreement, the default equal sharing rules apply.
What must a contracting out agreement include to be valid in New Zealand?
To be legally enforceable under the Property (Relationships) Act 1976, a contracting out agreement must be in writing, signed by both parties, and witnessed by a lawyer who certifies they explained the agreement and its effects to each party independently. Both parties must receive independent legal advice from separate lawyers before signing. These requirements cannot be waived.
Can de facto couples use a contracting out agreement in New Zealand?
Yes. The Property (Relationships) Act 1976 was amended to include de facto couples in 2002. De facto couples who have lived together for three or more years, or who have a child together, are subject to the equal sharing rules and can enter into a contracting out agreement to vary those rules. The same independent legal advice requirement applies.
Why does independent legal advice matter for a contracting out agreement?
The independent legal advice requirement exists to protect both parties and ensure the agreement is fully informed and voluntary. If a party did not receive proper legal advice, a court can set aside the agreement under section 21J of the Property (Relationships) Act on the grounds that it would be unjust to enforce it. Courts have set aside agreements where one party did not understand the full effect of what they were signing.
How much does a contracting out agreement cost in New Zealand?
Because both parties need independent legal advice from separate lawyers, costs typically range from $800 to $3,000 or more depending on complexity. Each lawyer charges separately. While you cannot avoid the legal advice requirement, you can reduce costs by preparing a clear draft of what you want to agree to before going to lawyers, and choosing a straightforward agreement with limited assets.
Can a contracting out agreement be changed after it is signed?
Yes. A contracting out agreement can be varied or cancelled by a further agreement in writing that also complies with the requirements of the Property (Relationships) Act 1976 — meaning both parties again need independent legal advice and the agreement must be signed and witnessed by their respective lawyers.
Can I draft a contracting out agreement myself without a lawyer in New Zealand?
You can draft the initial terms of the agreement yourself, but a lawyer must certify the agreement and provide each party with independent advice before it can be signed. You cannot avoid lawyer involvement for a contracting out agreement to be enforceable under the Property (Relationships) Act 1976. uplaw.ai can help you understand the issues and prepare a draft to take to your lawyer.
What happens if I do not have a contracting out agreement and my de facto relationship ends?
If your de facto relationship has lasted three or more years (or involved a child), the Property (Relationships) Act 1976 default rules apply. The Family Court will treat most relationship property as equally owned and divide it 50/50. Separate property — assets acquired before the relationship or by gift or inheritance — is generally retained by the owner, but the boundaries can be contested.
How does uplaw.ai help with contracting out agreements in New Zealand?
Tell us about your situation — whether you are entering a new relationship or updating an existing one, what assets you want to protect, and whether you have children from previous relationships in the chat. We help you understand what the agreement needs to cover and prepare a draft for you to take to your independent lawyer.
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