How to protect your property if you are in a relationship

If you are ‘living together’ in a marriage, civil union or de facto relationship, or you are intending to enter into such a relationship, then you need to be aware of the laws that cover your property rights.  The general rule is that if you are living together in one of those relationships for three years or more and you then separate, any ‘relationship property’ will be divided equally. 

Jackie and Anthony began living together in a de facto relationship six years ago.  When they started living together they lived in the house Anthony had owned for two years prior to their relationship.  Anthony continued to pay the mortgage on the home during their relationship, and Jackie helped out with the household bills and contributed to some maintenance and improvements on the home. 

When they recently separated Anthony was pretty sure that the house would still be his, as it was in his name and he owned it before their relationship.  He also paid the mortgage and early on in their relationship Jackie had agreed it was ‘his house’. 

Was Anthony right?  No!  Because they have been in a de facto relationship for more than three years, without any measures in place to protect Anthony’s interest in his home, the home that they lived in is relationship property and must therefore be shared equally.   Jackie is entitled to a half share in the home.

If your relationship is one that the relationship property laws apply to then if you and your partner separate the property that you both own will be classified as either your separate property or your relationship property.  Any separate property is retained by the partner who owns it, whereas any relationship property will usually be divided 50/50 (although there are some exceptions to this rule). 

Other points to note:

• Relationship property laws can sometimes apply to relationships of less than three years, for example if there is a child of the relationship.
• The definition of ‘living together’ can in some circumstances apply even if you haven’t packed bags and boxes and physically moved in together.  There are several other factors that are taken into account including, how you and your partner arrange your finances, the nature and extent of a common residence, and whether or not a sexual relationship exists.
• Relationship property laws can apply to assets such as your business, your superannuation, any investments you may have, your vehicle(s) and household chattels.
• Any inheritance you receive can also become relationship property if you do not know how to protect it as separate property. 

In order to have the best protection for your property from any relationship property claims, you may need to enter into a Contracting Out Agreement.  This is a written agreement between you and your partner that records who owns what property.  In order for such an agreement to be valid it must be signed by each of you and your independent solicitors.

If you want further information about a Contracting Out Agreement or you think you might need one you should obtain legal advice.  Similarly, if you have one and you think it needs updating/reviewing, or you would like to arrange an initial consultation, contact us on (04) 473 6850.