The Property Relationships Act 1976 (PRA) is one of the most important pieces of legislation affecting the personal finances of New Zealanders — yet most people don’t understand how it works until they’re in the middle of a separation.
This guide explains the PRA in plain English. It is general information only — not legal advice. Get a lawyer for advice specific to your situation.
The Property Relationships Act means that when a marriage or de facto relationship of 3+ years ends, all relationship property (property acquired during the relationship) is split 50/50. The family home is always relationship property. If you want different arrangements, you need a contracting-out agreement — not just separate bank accounts.
Disclaimer: This article contains general information about the Property Relationships Act 1976. It is not legal advice. Every situation is different. Get independent legal advice from a qualified NZ lawyer for guidance on your specific circumstances.
Who Does the PRA Apply To?
The Property Relationships Act applies to:
| Relationship type | When it applies |
|---|---|
| Married couples | From the date of marriage |
| Civil union couples | From the date of civil union |
| De facto couples | After 3 years of living together |
De facto relationship defined: Two people (regardless of gender) who live together as a couple but are not married or in a civil union. The 3-year threshold counts from when you started living together as a couple.
De facto relationships under 3 years
If your de facto relationship is less than 3 years, the full PRA provisions don’t automatically apply. However, you may still have a claim if:
- There is a child of the relationship
- One partner has made significant contributions (financial or non-financial) to the relationship
- It would be unjust to not apply the PRA
This is a more complex area — get legal advice if you’re in a shorter de facto relationship and separating.
Relationship Property vs Separate Property
This is the core of the PRA.
Relationship property (split 50/50)
Relationship property is everything accumulated during the relationship. It includes:
- Income earned by either partner during the relationship
- Savings and investments accumulated from relationship income
- KiwiSaver contributions made during the relationship (and returns on those contributions)
- The family home (regardless of whose name is on the title)
- All chattels (furniture, appliances, vehicles) used by the family
- Business interests (more complex — valuation required)
- Any other property acquired during the relationship using relationship income
The key principle: It doesn’t matter whose name it’s in. It doesn’t matter who earned the money or who managed the savings. Income earned during the relationship belongs to both partners equally.
Separate property (stays with the original owner)
Separate property is:
- Property owned before the relationship started (if kept genuinely separate)
- Gifts received during the relationship (from outside the relationship — e.g., a family gift)
- Inheritances received during the relationship (if kept separate)
- Property explicitly agreed to be separate under a contracting-out agreement
The critical word is “separate.” If you receive an inheritance and deposit it into your joint account, or use it to pay down the joint mortgage, it may become relationship property through “commingling.” If you want to protect an inheritance as separate property, keep it in an account in your name only and don’t mix it with relationship funds.
The Family Home — Always Relationship Property
This surprises many people: the family home is always relationship property under the PRA, regardless of:
- Whose name is on the title
- Who paid the deposit
- Who has been paying the mortgage
- Whether the home was owned before the relationship
If you owned a home before the relationship and your partner moved in, and you’ve been together for 3+ years, the family home has become relationship property.
There are provisions within the PRA for accounting for pre-relationship contributions (so the partner who owned the home before may receive a larger share to recognise their pre-relationship contribution) — but this is complex and fact-specific. Get legal advice.
KiwiSaver as Relationship Property
KiwiSaver balances accumulated during the relationship are relationship property.
Specifically:
- Contributions made during the relationship (your contributions + employer contributions)
- Investment returns on those contributions
- …are all relationship property
The portion attributable to contributions made before the relationship is separate property.
How KiwiSaver splits work in separation
- The relationship period and pre-relationship period are identified
- The KiwiSaver balance is allocated (approximately) between relationship and pre-relationship portions
- The relationship portion is split 50/50
- A formal transfer is made from one partner’s KiwiSaver account to the other’s
The transferred funds remain locked in KiwiSaver — they cannot be cashed out just because they’ve been transferred.
Contracting-Out Agreement (Pre-Nuptial Agreement)
A contracting-out agreement is a legal agreement that changes the default property division rules under the PRA. In NZ, this is what most countries would call a “pre-nup” — though it can be entered into at any time during a relationship, not just before marriage.
When you might want one
- Either partner brings significant pre-relationship assets into the relationship (property, a business, substantial investments)
- Either partner expects a significant inheritance they want to protect as separate property
- One or both partners have children from a previous relationship whose interests they want to protect
- One partner has significant pre-relationship debt they don’t want to become the other’s problem
- You want ownership arrangements to differ from the PRA defaults for any reason
Requirements for a valid contracting-out agreement
A contracting-out agreement is only legally valid if:
- It is in writing
- Both parties have received independent legal advice before signing (from separate lawyers)
- Both parties’ lawyers witness the signing of the document
- Both parties signed voluntarily (without coercion or undue pressure)
If any of these requirements are missing, the Court may set the agreement aside.
Cost
- Approximately $500–$1,500 per party for a simple contracting-out agreement
- More complex situations (business valuation, trust involvement) cost more
- Both parties need their own lawyer — you cannot share a lawyer for this
Timing
- Contracting-out agreements can be entered into before, during, or after marriage/civil union, or at any time during a de facto relationship
- The agreement should be finalised well before the relationship begins (if possible) to reduce risk of a party arguing they were under pressure to sign
- Leave at least 1–2 months before a wedding to allow time for both parties to get legal advice and negotiate terms
What Happens If You Separate — The Process
Agreement
Most separating couples eventually reach an agreement on property division, either directly or with the help of lawyers. A formal separation agreement under the PRA:
- Must be in writing
- Both parties must have independent legal advice
- Both lawyers must witness signing
Mediation
If direct negotiation fails, a mediator (often a Family Court mediator) can help the parties reach agreement. This is faster and cheaper than Court.
Family Court
If agreement cannot be reached, either party can apply to the Family Court to have property divided. The Court applies the PRA principles — typically 50/50 for relationship property with adjustments for extraordinary contributions or other factors.
Family Court proceedings can take months to years and are expensive. Most parties are strongly incentivised to agree before reaching this point.
Trusts — Sometimes Used to Protect Assets
Family trusts are sometimes used in NZ to hold assets outside of personal ownership, potentially protecting them from a property relationship claim.
Whether a trust actually protects assets from a PRA claim is a complex legal question that depends on:
- When the trust was established
- Who the trustees are
- Whether the trust was established with the intent of defeating a PRA claim
Courts have sometimes “pierced the trust” and treated trust property as relationship property where the trust was set up to defeat a partner’s PRA entitlement. Get specialist legal advice if trusts are involved in your financial planning.
Key Takeaways
| Concept | Key point |
|---|---|
| PRA applies to | Married, civil union, and 3+ year de facto couples |
| Default split | 50/50 for all relationship property |
| Family home | Always relationship property — regardless of names, deposit, or payment history |
| KiwiSaver | Contributions during relationship = relationship property |
| Separate property protection | Keep pre-relationship and inherited assets genuinely separate — don’t commingle |
| Different arrangements | Requires a contracting-out agreement with independent legal advice |
| The account name doesn’t matter | Having separate accounts doesn’t make your savings separate property |
Next Steps
- If you have significant pre-relationship assets, talk to a lawyer about a contracting-out agreement — before you move in together or as soon as possible in your current relationship
- If you’ve received an inheritance, keep it in an account in your name only and do not mix it with joint funds if you want it to remain separate property
- If you’re separating, get independent legal advice immediately — understanding your rights before negotiations begin is essential
- Don’t assume separate accounts means separate property — this is the most common misconception in NZ relationship law
See also: Relationships hub · Combining Finances as a Couple NZ · Separation finances checklist · Getting Married finances