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When will the Property (Relationships) Act 1976 apply?

The Property (Relationships) Act 1976 applies to:

  • any immovable property in New Zealand;
  • any movable property in New Zealand;
  • any movable property overseas if one partner is usually resident in New Zealand.

If the partners own movable property overseas, like money saved in a foreign bank or a car kept overseas, the Property (Relationships) Act 1976 might apply.

But if either or both partners own immovable property overseas, like land and buildings, the New Zealand courts cannot require the partners to divide those items of property under the Property (Relationships) Act 1976.

The reason foreign immovable property does not come under the Property (Relationships) Act 1976 is that the law respects each state’s sovereignty to deal with land in their territory.

Gil and Evelyn
Gil and Evelyn are New Zealanders living in Timaru and have been married for 30 years. They have a holiday apartment on the Gold Coast in Australia. Gil and Evelyn separate. They disagree on what should happen to the apartment. A New Zealand court cannot decide what should happen to the apartment because it is within the jurisdiction of the Australian courts and the Property (Relationships) Act 1976 will not apply.
Anika and Tai
Anika and Tai have been in a relationship for 12 years. For some of that time they lived and worked in Canada. As part of Tai’s employment package he earned the right to a small pension from his employer. Anika and Tai move back to New Zealand. They then separate. A New Zealand court would likely say that Tai’s pension is relationship property under the Property (Relationships) Act 1976.

What are the problems with the law?

Because the Property (Relationships) Act 1976 does not apply to immovable property overseas, it may mean that a couple must go to the courts in that country to decide what happens to that property. They must also go to court in New Zealand to decide what happens to the rest of their property. Multiple court cases can be long and expensive.

In some cases, one partner has argued that the other partner should pay compensation because they can keep their overseas immovable property without having to divide it under the Property (Relationships) Act 1976. But the New Zealand courts have not awarded compensation out of respect for other states’ sovereignty to deal with land in their territory.

That means that the New Zealand courts do not take into account everything the partners own worldwide when the court decides what orders are fair under the Property (Relationships) Act 1976.

Some people might think that is strange that the courts can divide movable property under the Property (Relationships) Act 1976 but not immovable property.

We want to know if you think the rules could be improved.

An option is to make two changes to the Property (Relationships) Act 1976:

  1. First, rather than focus on whether the property is movable or immovable, the rules could focus on whether the partners’ relationship had a close connection with New Zealand. For example, if a couple spent most of their time or had most of their property in New Zealand, the Property (Relationships) Act 1976 would apply.
  2. Second, if the relationship had a close connection with New Zealand, the Property (Relationships) Act 1976 could say that the New Zealand court must take into account all the partners’ property regardless of which country it is in.

But the court would not have power to make orders requiring a partner to sell or transfer any immovable property he or she owns overseas. Instead, the court could divide the total value of the couples’ property by ordering that the partner with the overseas immovable property must pay money or transfer other property to the other partner.

That way, the New Zealand court would not be interfering with land in another country, but the court could still fairly divide the value of all the couple’s property.

What do you think?

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