New Law looks afresh at Property Relationship

New Law looks afresh at Property Relationship

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Wellington, July 24, 2019

Justice Minister Andrew Little (Beehive Picture)

Justice Minister Andrew Little tabled yesterday (Tuesday) the Law Commission’s final Report on its review of the Property (Relationships) Act 1976.

The Property (Relationships) Act 1976 (PRA) sets out how relationship property should be divided when a relationship ends by separation or death.

The Report makes 140 recommendations and concludes that, while many of the existing rules within the Act are satisfactory, the Act is no longer fit for purpose, and recommends a new Act be introduced covering relationships ending by separation.

The Law Commission did not consider relationships ending on death, and recommended that these should be dealt with separately.

Outdated and Unfit

“The Report’s overall conclusion is that the PRA is out-of-date and no longer fit for purpose in the 21st century. I thank the Law Commission, and in particular Deputy President Helen McQueen, for their hard work over the past three years, and to those who took the time to provide considered submissions through the consultation process,” Mr Little said.

He said that he tabled the Report in accordance with his statutory responsibilities and that the Coalition Government will give further consideration to the Report’s recommendations and the wider impact of its proposals.

How it began

The process began in May 2016, when the Law Commission began a comprehensive review of the PRA. A year later, the Commission released its Issues Paper, Dividing Relationship Property – Time for Change? Te mātatoha rawa tokorau – Kua eke te wā? which explored whether or not the PRA is achieving a just division of property when a relationship ends.

The Commission received over 300 submissions on the issues paper and hosted 16 public consultation meetings throughout the country.

Drawing on these submissions, the Commission released a preferred approach paper late last year and sought feedback. One hundred submissions were received in response to the proposed law reforms, which were factored into the final Report.

Wide-ranging recommendations

The Report makes 140 recommendations for reform that cover a wide range of topics.

The Commission’s key recommendations include (a) Introducing a new statute, the Relationship Property Act. This should be the principal source of law applying to the division of property when relationships end on separation (b) Changing how the family home is classified. Currently the family home is always treated as relationship property and usually divided equally, regardless of when or how it was acquired (“Under our recommendations, if the family home was owned by one partner before the relationship began or was received as a third party gift or inheritance, only the increase in the value of the home during the relationship should be shared”) (c) Simplifying the eligibility criteria; The law should apply in the same way to all marriages and civil unions, and de facto relationships that meet certain requirements. Most de facto relationships would still need to satisfy a three year duration requirement before the law applies to them. We recommend changes that will it make easier for de facto partners to know when their relationship is subject to the Relationship Property Act (d) Introducing Family Income Sharing Arrangements (FISAs). FISAs would replace both the court’s compensatory powers under section 15 of the PRA and maintenance under the Family Proceedings Act 1980. Under a FISA, partners would share income for a limited period following separation in order to ensure the economic advantages and disadvantages arising from the relationship or its end are shared more fairly. The amount and duration of a FISA should usually be calculated by a formula that takes into account the partners’ incomes before separation and the length of the partners’ relationship (e) Giving a court greater powers to divide trust property. These powers should apply when a trust holds property that was produced, preserved or enhanced by the relationship (f) Giving children’s best interests greater priority in relationship property matters. This should include greater rights to occupy the family home in the period immediately following separation (g) Improving the way relationship property matters are resolved in practice. Our recommendations are designed to promote the just and efficient resolution of relationship property matters and address behaviour that causes delay and increases costs.

The full Report is available on the Law Commission’s website: https://www.lawcom.govt.nz/our-projects/review-property-relationships-act-1976?id=1589

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