The Property (Relationships) Act 1976 ("Act") is the legislation that deals with how property and assets are divided if a relationship ends.  The Act presumes that each individual contributes equally to the relationship, regardless of the actual cash or physical contributions, and it aims to provide a division of the relationship property.  The starting point is always for an equal division of assets, but there are some provisions of the Act that allow for adjustments to the general presumption of equal sharing.

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SEPARATION

When a couple separates the only way to ensure finality is to enter into a legally binding document provided for under the Act, often referred to as a ‘separation agreement’.  It is this document that sets out the agreement for the division of assets between the parties.

 

For a separation agreement to be legally binding, both parties must engage independent lawyers for advice.  The process of getting independent legal advice involves full disclosure between the parties, which then allows each lawyer to advise their respective client exactly what their entitlements are under the legislation.

 

Once legal advice has been provided, and the parties have agreed to the division of their assets, the separation agreement is drafted and signed, with the lawyers also certifying that they have advised their clients of their entitlements under the legislation.  This is very different to having the document witnessed, and the full process must be undertaken by the lawyer before they can provide such certification.  Without certification, an agreement is not binding.

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CONTRACTING OUT AGREEMENT

A couple can enter into a contracting out agreement (sometimes referred to as a pre-nuptial agreement or pre-nup) at any time during the relationship. This is sensible as it is completed at a time when the parties are communicating well, and without being in the stressful situation of a separation.

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A contracting out agreement enables the parties to contract out of the Act and set out their own agreement to determine the status, ownership and division of property in the event of separation. Most commonly, contracting out agreements are entered into to recognise different contributions towards property purchases, or to stipulate certain assets are to remain the separate property of each party.

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The process is the same as a separation - for a contracting out agreement to be legally binding, both parties must engage independent lawyers, full disclosure must be exchanged to enable each lawyer to advise and explain to their client the effects and implications of the agreement prior to signing, and then certify that they have done so.

Click below to read our articles covering aspects of separation and contracting out agreements in more detail or contact us​ to discuss.