Zara and Alex had been together for five years. They lived in a property that Alex had purchased before their relationship began. Zara and Alex shared the bills – the power, internet, groceries etc. – but Alex continued to pay the mortgage. Alex did earn a lot more than Zara and, as well as paying the mortgage, was contributing 8% to KiwiSaver. The KiwiSaver account was growing nicely. Zara hadn’t yet started a KiwiSaver account. It was just one of those things that she had never got round to. She was also enjoying having a bit of extra money with not having to pay any rent but would sometimes pay for dinner when she and Alex went out as a trade-off.

After a while Zara and Alex’s relationship began to break down. Alex was ambitious and driven, keen to purchase a rental property now that the mortgage on their home was getting manageable. Zara was a life-styler. She wanted to spend any extra money on going out or travel. This became a bit wearisome for Alex after a while and they decided to separate.
Because the house was in Alex’s name and Zara had made no financial contribution, there didn’t seem to be anything that they needed to sort out. Alex suggested writing an agreement between them, but Zara just didn’t see the point. She had nothing of her own, and everything Alex owned was his.
Twelve months later, Zara had a new partner, Sam. Sam had some friends who were lawyers and one night when they were out Zara told one of Sam’s friends about her relationship with Alex. Zara said that she had left the relationship, but that because the house had been Alex’s there was nothing for her anyway. The lawyer friend told Zara that because Alex’s house was considered the “family home”, Zara would have a claim for 50% of the equity in the property. They also said that Zara would be entitled to half of Alex’s KiwiSaver saved over the course of the relationship. The fact that Zara had spent all she had earned during that time was of no relevance. The lawyer friend suggested that Zara get some legal advice.
Four weeks later, Alex received a letter from Zara’s new lawyer stating that Zara was making a relationship property claim on Alex’s house and KiwiSaver. The letter asked Alex to disclose all bank accounts and investments owned at the time the relationship ended. It also said that Zara was putting a notice of claim on Alex’s property. That meant that Alex wouldn’t be able to sell or re-mortgage the property without dealing with Zara’s claim. Alex was naturally horrified and went to get legal advice.  
Alex’s lawyer said that as Zara and Alex weren’t married, Zara could make the claim within two years of separation and she was within that two-year window. The lawyer said that Zara’s claim was also valid and was within what the law would provide for Zara. Alex should have entered into a contracting out agreement when the relationship with Zara began, or at the very least insisted that they enter into a legally binding separation agreement at the end of the relationship, when Zara was amenable to agreeing that the property was solely Alex’s and that she had no claim.
Alex assumed the situation was straightforward because the property was in his name. However, under relationship property law, the family home and other assets can still be subject to division when a relationship ends. Taking legal advice early, both at the start and end of a relationship, can help provide clarity and avoid costly disputes later.

Tammy McLeod, Managing Director, Davenports Law