Contracting Out Agreements are an effective way to keep certain property separate from relationship property when a relationship between two people exists.  As the purpose of a Contracting Out Agreement is to define what is separate property and what is relationship property, it is important to have mechanisms in place to review the terms of a Contracting Out Agreement throughout the life of a relationship. 

This is because the nature of relationships and property never stay the same.

There have been cases where a Contracting Out Agreement has been set aside by the Family Court because it no longer is fair or reasonable as the relationship has progressed, or certain assets have been purchased and/or maintained by the other party.  It is important therefore to have a review clause so as to keep the Contracting Out Agreement relevant and to prevent the likelihood of disputes arising.

Certain times where you should consider reviewing the terms of a Contracting Out Agreement include:

  • When you start living with your partner or spouse;
  • When you become engaged to, or marry, your partner;
  • When you buy or sell real property (houses and land) with your partner/spouse;
  • When you sell separate property and want to keep the proceeds of sale separate;
  • When you enter into property arrangements with extended family members and/or receive money as loans or gifts from family members;
  • When a child of the relationship is born;
  • When either or both parties to the Agreement have a significant change in income; and
  • One or both of the parties to the Contracting Out Agreement retires from paid employment.

As a general rule the average lifespan of a Contracting Out Agreement before the need to review is usually between 3 to 5 years.  The positive aspect of putting a review clause in the Agreement is that it can be on your own terms and can occur within a time that you and your partner or spouse agree to review the terms.

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Shaun Cousins
Family Lawyer
Wellington


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