Frequently Asked Questions About Contracting Out Agreements
What is a Contracting Out Agreement?
A contracting out agreement can also be known as a Relationship Property Agreement and
sometimes referred to as a “pre-nup”. The agreement can cover as much or as little as the couple
wish. It can include the family home (even if this was purchased by one partner before the
relationship began or by inheritance, gift or via a trust). The only exception is if the property is on
Maori Land.
Can I prepare my own Contracting Out Agreement?
In theory, yes you can, but for the agreement to be binding and enforceable each party needs to
comply with the following:
● The agreement must be in writing and signed by both parties.
● Each party must have independent legal advice before signing the agreement.
● Each party’s signature must be witnessed by a lawyer; and
● The lawyer who witnesses the signature of the property must certify that they have advised
as to the effects and implications of the agreement.
It is important to be aware that even if the requirements have been complied with, the Court may
have the power to set the agreement aside if it amounts to a “serious injustice”.
When should an agreement be prepared?
At any time during a relationship and agreement can be prepared and signed. Ideally however it
should be signed before the relationship property laws under the Property (Relationships) Act 1976
(“the Act”) applies. This is generally once a couple have been living together in a de facto
relationship, in a civil union or married (or any combination of these) for 3 years or more. There are
limited circumstances where the Act can apply before that point.
What are the benefits?
The common benefits of a contracting out agreement include asset protection and the desire to
achieve certainty about how property would be divided in the event of separation and/or death.
Agreements are particularly common if one person has children from a previous relationship, there
are items of property that one person wants to keep separate from the relationship property (e.g., an
inheritance) or if one person is much wealthier than the other.
It is not an easy conversation to have with a person but the sooner it is discussed the better.
What will it cost?
Consider the agreement as an insurance policy. It takes time to draft, advise on and negotiate the
terms of an agreement. Our view is that a thorough contracting out agreement could save people a
considerable amount in the long run, both in legal fees and amounts of money.
What if a relationship has ended and you and your ex-partner cannot agree?
The Family Court can help divide your relationship property if you or your ex-partner cannot agree,
or negotiations break down. It can also help if the agreement is unfair. You will need to apply to the
Family Court with 1 year of your dissolution (divorce) or within 3 years from the end of your de facto
relationship. If the deadline is not met, you can ask the Court for permission to file.
Do agreements need to be reviewed?
It is important that agreements are regularly reviewed, by your lawyer, to make sure that the terms
do not being unjust and leaving the agreement vulnerable to being set aside by the Family Court.
What information does a lawyer need in the first meeting?
A brief history of your relationship including:
● Key dates
● Names and dates of birth of children (if any)
● A list of assets
● An idea of what you would like to achieve.
If you would like any further information or advice, please feel free to contact one of our
Relationship Property Team.
Disclaimer: The content of this article is general in nature and no intended as a substitute for specific
professional advice on any matter and should not be relied upon for that purpose.