What is a de facto relationship?

In New Zealand, a de facto relationship is generally defined as a relationship between two people aged 18 or over who live together as a couple and are not married to, or in a civil union with, each other. Understanding whether you are in a de facto relationship is important under the Property (Relationships) Act 1976. If a de facto relationship has lasted for more than three years, each partner is generally entitled to an equal share of the family home and other relationship property.

For some people, it will be obvious that they are in a de facto relationship. For others, however, there can be confusion as to whether they are in a de facto relationship (or about to become one), particularly on the “living together” point. If “living together” needs to be determined by the Court, the following factors can be considered:

• the duration of the relationship:
• the nature and extent of common residence:
• whether or not a sexual relationship exists:
• the degree of financial dependence or interdependence, and any arrangements for financial support, between the parties:
• the ownership, use, and acquisition of property:
• the degree of mutual commitment to a shared life:
• the care and support of children:
• the performance of household duties:
• the reputation and public aspects of the relationship.

A de facto relationship generally only needs to be formally determined if the matter comes before the Court. In making that determination, the Court may consider all or only some of the relevant statutory factors, depending on what it considers appropriate in the circumstances.

The Courts have recognised de facto relationships in a wide range of situations including cases where the parties did not ordinarily live under the same roof, or where a couple had divorced overseas but continued living together. Assessing whether a de facto relationship exists can therefore be a complex and highly fact-specific exercise.

Are we in a de facto relationship?

If you are trying to determine whether your relationship is de facto, carefully consider the factors listed above. Even if only some of those factors apply, it may be prudent to treat the relationship as de facto — particularly if you are deciding whether you need a contracting out agreement (often referred to as a “prenup”).

If you are confident that your relationship is not de facto, but would like reassurance, seeking legal advice is advisable

Why are de facto relationships important?

Once a couple has been in a de facto relationship for three years or more, each partner is generally entitled to an equal share of the relationship property if they separate or if one partner dies, under the Property (Relationships) Act 1976.

This means that if either person has assets they wish to retain as their own in the event the relationship ends such as a home, KiwiSaver, or a business they should consider entering into a Relationship Property Agreement (also known as an “RPA”, “prenup”, or “contracting out agreement”).

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An RPA allows you both to clearly record how assets will be divided on separation or death, reducing the risk of a dispute or a claim in the Family Court. While not the most romantic conversation, those who have experienced relationship property litigation will often say that an agreement can save significant time, money, and stress in the long run.

What if we’ve kept our finances completely separate?

Keeping finances separate does not necessarily prevent a relationship from being classified as de facto. In Watene v Lord, the Court found that maintaining separate bank accounts was not determinative of the nature of the relationship. Other factors such as the degree of commitment, shared life arrangements, or public perception of the relationship may outweigh financial separation. Each case turns on its particular facts.

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What if we’ve been on-again and off-again?

The start and end dates of a de facto relationship can be fluid and difficult to pinpoint. The law is not always clear-cut. While a couple will generally need to have been in a continuous relationship for three years to qualify, some “stop-start” relationships have still been treated as continuous overall, even where one partner did not view them that way.

Clearly agreeing (and documenting, where appropriate) when your de facto relationship began can help avoid costly disputes later.

What else should we know?

• Relationships under three years: Even if a relationship has lasted less than three years, the Court may still order division of property in certain circumstances for example:
• If there is a dependent child of the relationship (whether or not both partners are biological parents); or
• If one partner has made a substantial contribution, it would be seriously unjust not to make an order.

In these cases, any division is usually based on each partner’s contributions.

• If we know we’re not de facto (yet): In Sutton v Bell, the Supreme Court of New Zealand held that transferring property into a trust shortly before entering a de facto relationship did not necessarily prevent a claim. The Court considered the clear intention to progress the relationship as a relevant factor.

At a minimum, couples who intend to move toward a de facto relationship should consider entering into a relationship property agreement early, to reduce the risk of later disputes and potential court proceedings.