We all know someone whose home can't be lived in following
the Christchurch earthquakes. In many cases, displaced people have
been relying on the good nature of their friends, family, or
current partner to put a roof over their heads.
If you have taken in someone you're in a relationship with
– even if it isn't that serious - it is hard to believe
that your generosity could backfire in the future. But you should
be aware that if you don't take the time to look after your own
interests now, there may come a time when you end up losing out
because of the impact of the law on your new living
Take Suzy, for instance, in this fictitious yet possible
Suzy was very well placed. She had been working hard for a
number of years and had built up considerable equity in her own
home. She was sitting pretty. In mid 2010 she met Mark and they
began a relationship. To be honest it was an on again, off again
sort of relationship, but it was something to fill the long winter
Mark was a bit of a late bloomer. He was just starting out on
his first job following university and was enjoying earning a few
bucks and flatting in the city.
Then on 4 September 2010 it all came tumbling down and Mark had
no place to live. Although the relationship wasn't super
serious, given his situation, Suzy let Mark move in with her until
he could find something more permanent.
As happens though, the living together was the thing that became
more permanent. Mark paid rent which relieved Suzy's mortgage
payments. He also helped with maintenance around the house and
garden so she wasn't complaining about that either! And he was
quite the cook. Eight months, and another major earthquake later,
the arrangement was still working.
If we could fast forward three years and show Suzy her
relationship coming to a stormy end, do you think she would be so
happy? Not only would her relationship be at an end, but by law
Mark could possibly leave the relationship with half of the hard
earned equity in Suzy's home - and half the chattels. He was
still paying off his student loan so saved very little in three
years but he would be entitled to half of the money which Suzy
saved during their relationship.
The Property (Relationships) Act 1976 sets out how property is
to be divided when a relationship ends and the starting point for
de facto, married, or civil union couples who have lived together
for three years (and shorter periods of time in certain
circumstances) is that each party has contributed equally to the
relationship and so should be entitled to share equally in the
property of the relationship on separation.
It should be kept in mind that this does not just mean financial
contributions. For example, while Suzy may consider Mark's
gardening, maintenance and repair of the property a simple fact of
helping out, Mark may have an argument that he had, in fact,
maintained and increased the value of the house. If Mark did all
the shopping and cooking it may be because he was a very good cook.
However, he could argue that he was managing the household which
enabled Suzy to concentrate on other things.
Quite the minefield, isn't it? So what do you do if you are
in Suzy's position?
The effect of the Property (Relationships) Act can be
circumvented by entering into a 'Contracting Out Agreement'
which will allow the parties to decide in advance how their
property will be divided if they separate. Each party is required
to obtain independent legal advice so that they know what they are
Had Suzy asked Mark to sign a Contracting Out Agreement before
taking him in, she could have put her home, chattels, debts and
savings into the 'Separate Property' category so that when
he moved out, he would only be entitled to take those items which
he brought into the relationship.
The people that are in a serious relationship have probably
thought about the implications of the law before moving in
together. However in extreme circumstances like the earthquake,
decisions like this don't always get thought through quite as
carefully, and that is where the issues can arise.
The Act does not apply to a flatting situation so you need not
be concerned if you are merely taking a friend in need into the
home you own and you have no hint of a relationship beyond
friendship. However, if your friendship progresses beyond that
point, then you should consider entering into a Contracting Out
Agreement to make it clear that what's yours is yours and
what's theirs is theirs.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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