Relationship Property - Court rules out spouses claiming both occupational rent and interest on their share of property, so it is vital to get the choice correct…

Occupational rent is compensation that may be paid to a former partner who has moved out of the family home. This is to compensate that non-occupying party for the fact that they have had to pay rent or other accommodation expenses while living out of the home, while the other party continues to enjoy occupation of the family home rent-free.

In a recent decision, the High Court ruled that a former spouse could not claim both occupational rent and interest on their share of capital left in a family home after the couple separated.

Several years into their marriage the parties had signed a contracting out agreement, which defined the family home, which the husband had owned prior to the relationship, as his separate property.

When the couple separated the wife successfully applied to the Court to set the agreement aside, with the effect that family home was reclassified as relationship property, giving her a claim to half.

Issues arose after the breakdown of the relationship. The wife moved out of the home and applied to the Court for occupational rent, and interest on her half share in the property as the non-occupying party.

The High Court held that the wife could either be compensated for occupational rent, or for interest on her share of the capital left in the family home until settlement property division, but not both. To allow both claims would be compensating twice for the same loss.

It is therefore important to know what your options are before making a claim. Compensation for a claim for rent might be very different to a claim for interest on capital.

As a simple example, if the non-occupying partner’s interest in the home was $500,000, and interest on this sum was payable over 12 months from the date of separation to the date of payment, the interest payment would be approximately $5,450.

On the other hand, if the market rental for the home was $500 per week, for the same 12 month period, the non-occupying partner may be entitled to claim occupational rent of $13,000 (50% of $26,000).

The division of relationship property can be complex and there is no ‘one size fits all’ formula for determining compensatory claims. If you are unsure what your rights are, or how to proceed, it is important to take legal advice from a specialist in this area early before you proceed with any of your options.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.

Please note that Rainey Collins is not contracted to provide Legal Aid, other than in the Treaty of Waitangi area.  We therefore are unable to take on any Civil or Family Legal Aid work. If you require Legal Aid in those areas, you can search the list of Legal Aid lawyers on the Ministry of Justice website.