Protecting Love and Property: Bob’s Story
Bob had been living in his first home for a year when he met Lizzy at the burger bar.
They fell in love, and Bob wanted Lizzy to move into his home to live together. Bob had a funny feeling that he should seek legal advice before asking Lizzy to move in with him.
Bob went to see his lawyer at Edmonds Judd. “I’d like to talk about getting a pre-nup with my girlfriend”. “Absolutely”, Bob’s lawyer replied, “in New Zealand they are known as a Contracting Out Agreement, and they allow you to contract out of the provisions of the Property (Relationships) Act 1976”.
Bob explained that he and Lizzy had only been dating for 6 months, however, Bob was confident that she was the one. He hoped the relationship would go on for a long time, but he was wary of what could happen if their relationship ended in a few years. “Things could get messy, right?”, said Bob. Bob’s lawyer nodded and explained a bit about relationship property law and what would happen if the relationship passes 3 years in duration.
The team at Edmonds Judd had assisted Bob with the purchase of his first home, which he funded using an inheritance from his father Steve’s estate. Recognising the importance of protecting his assets, Bob’s lawyer recommended that he enter into a Contracting Out Agreement to safeguard his property from any potential relationship property claims in the future.
“But wait”, Bob frowned, “I had a look at that, Relationship Property Act thingy before I came here, and it said that inheritance is separate property, so I don’t need a contracting out agreement.”
“Well, that’s true”, his lawyer conceded, “but only so far as the inheritance is kept sufficiently separate from any relationship property. If Lizzy moves into your home and you do not enter into a Contracting Out Agreement, the whole property would be considered relationship property if the relationship passes 3 years in duration and qualifies as a “de facto relationship”. Bob was gobsmacked and decided he would like to proceed with the preparation of a Contracting Out Agreement but first he needed to have a difficult conversation with Lizzy.
Fortunately, when he had a chat with Lizzy, it wasn’t a difficult conversation at all. She was on board with entering a Contracting Out Agreement as she owned a property with her sister that she wanted to keep out of the relationship property pool too.
They were both comfortable with their decision and instructed their respective lawyers to prepare and negotiate the Contracting Out Agreement, after all, there was no harm in hoping for the best while planning for the worst.
