A Contracting Out Agreement is, simply put, an agreement between parties setting out who owns what and how things should be divided in the event of separation.
The reason Contract Out Agreements are a good idea is that in the event you separate without one, equal sharing rules will apply. The most common example we see where this becomes an issue is when couples purchase a house together and the deposits are significantly different. A Contracting Out Agreement can outline what the initial deposits are, so that in the event you separate you will get back what you have initially put into a property.
Generally things like family heirlooms will remain your property, but if you transfer the likes of an inheritance into a joint bank account there is a risk that this will be required to be shared equally in the event of separation.
To formalise a contracting out agreement, both parties will need to take independent legal advice from a solicitor who will explain the agreement and sign that they have explained the details to you.
Get in touch to discuss whether a contracting out agreement might be right for you.
Frequently Asked Questions
What is a contracting-out agreement under NZ law?
A contracting-out agreement, commonly known as a ‘prenup’, is a legal document that allows couples to decide how their property will be divided if they separate or one partner dies. It allows you to contract out of the Property (Relationships) Act 1976, which usually dictates a 50/50 split of relationship property.
Do contracting-out agreements protect me in the event of separation?
Yes, these agreements provide significant protection by clearly defining which assets are separate property and which are relationship property. By establishing these rules early, you avoid the uncertainty and potential legal costs of a dispute if the relationship ends.
What can and cannot be covered in a contracting-out agreement?
You can cover a wide range of assets, including family homes, inheritances, businesses, and even future earnings or debt. However, the agreement cannot be seriously unjust. If the terms are deemed too one-sided or unfair at the time of separation, a court may set the agreement aside.
How much does it cost to prepare a contracting-out agreement?
The cost and timeframe vary depending on the complexity of your financial situation and how quickly both parties reach an agreement. While we offer fixed fees for many services, contracting-out agreements require independent legal advice for both partners, which means two separate law firms will be involved in the final certification.
Do contracting-out agreements need to be notarised?
In New Zealand, these agreements do not need to be notarised, but they must be signed and certified by a lawyer from two different firms. The lawyer’s certification serves as the official validation required by the Property (Relationships) Act to ensure the document is enforceable.
Can I create a contracting-out agreement without a lawyer?
No, a contracting-out agreement is not legally binding in New Zealand unless each party has received independent legal advice. For the agreement to be valid, a lawyer for each partner must witness the signatures and certify that they have explained the document's effects and implications.
