A Guide to Relationship Property and Property Sharing Agreements

When entering into a relationship, purchasing property with others, or separating, it is important to understand how property rights are managed under New Zealand law.

Three types of agreements are commonly used in this space: Contracting Out Agreements, Separation Agreements, and Property Sharing Agreements. While they can sound similar, they serve different purposes and are used at different stages.

Contracting Out Agreements

A Contracting Out Agreement (often referred to overseas as a “pre-nup”, although it can be entered into at any time during a relationship) allows a couple to decide in advance how their property will be divided if their relationship ends.

Under the Property (Relationships) Act 1976, relationship property is generally divided equally. A Contracting Out Agreement allows couples to agree on a different arrangement.

When might you need a Contracting Out Agreement?

·        You are entering a new relationship and want to protect assets you already own

·        One partner owns a home, business, or significant investments

·        You expect to receive an inheritance or have family assets to preserve

·        There are children from previous relationships

·        You and your partner are contributing unequally and want this recognised

·        You want clarity and certainty to avoid disputes later

These agreements must meet strict legal requirements, including both parties receiving independent legal advice.

Separation Agreements

A Separation Agreement (formally, an agreement under section 21A of the Property (Relationships) Act 1976) is entered into after a relationship has ended.

It records how the couple has agreed to divide their relationship property and resolve their financial affairs.

When might you need a Separation Agreement?

·        You have separated and want to reach agreement on division of property

·        You want to formalise arrangements to make them legally binding

·        You want to avoid Court proceedings and finalise matters efficiently

·        You need certainty to move on with refinancing, sale of property, or financial arrangements

A well prepared Separation Agreement brings closure and reduces the risk of ongoing disputes. Where there are shared trusts, companies, and borrowing, it is important to ensure that the mechanics are implemented correctly – see our article Relationship Property Agreements and Settlement Mechanics: What We Are Seeing and Why It Matters News | DTI Lawyers.

Property Sharing Agreements (Co-ownership Agreements)

A Property Sharing Agreement is different again. It applies where two or more people purchase property together, whether or not they are in a relationship.

It is not governed by the relationship property regime, and instead sets out how the property is owned, managed, and dealt with between co-owners.

When might you need a Property Sharing Agreement?

·        You are buying property with someone who is not your partner (for example, friends, siblings, or parents)

·        You and another person are contributing unequal deposits or mortgage payments

·        You want clarity on who pays for outgoings, maintenance, or improvements

·        You want to agree upfront what happens if one person wants to sell, cannot meet their obligations, or circumstances change

·        You are entering into a family property arrangement (for example, helping children into their first home)

·        You are investing in property with others

Without a Property Sharing Agreement, disputes are often resolved based on legal title or general property law principles, which may not reflect what the parties actually intended. This can be particularly important where the parties have agreed that they will contribute differently towards the property's mortgage repayments, rates, insurance, maintenance, or other ongoing expenses. A Property Sharing Agreement can record each party's obligations and expectations from the outset, providing clarity and reducing the risk of misunderstandings or disputes in the future.

We recommend obtaining legal advice early and putting a Property Sharing Agreement in place at the same time as the purchase.

Key Differences

·        A Contracting Out Agreement is about planning ahead within a relationship

·        A Separation Agreement is about finalising division after a relationship ends

·        A Property Sharing Agreement is about how property is owned and managed between co-owners, whether or not they are in a relationship

When more than one agreement may be needed

In some situations, more than one agreement is appropriate.

For example:

·        A couple buying a home with unequal contributions may need both a Contracting Out Agreement and a Property Sharing Agreement

·        A family property arrangement may require a Property Sharing Agreement, and potentially a Contracting Out Agreement if one of the parties is in a relationship

Final thoughts

The right agreement depends on your circumstances and timing, whether you are entering a relationship, purchasing property, or separating.

Putting the appropriate agreement in place early can provide clarity, protect your interests, and help avoid costly disputes later.

It is also important to ensure that your will is up to date and reflects any agreements you have entered into. Relationship property agreements and co-ownership structures can have a direct impact on how your assets are dealt with on death, and your will should align with your current intentions.

If you are unsure which agreement is right for you, it is important to obtain legal advice tailored to your particular circumstances. The relationship property team at DTI Lawyers can provide advice on the options available and help you put the appropriate arrangements in place.