Uncover the power of contracting out agreements in protecting your investment and ensuring an equitable division of assets.
In New Zealand, the excitement of buying a first home often comes with a complex twist: unequal financial contributions. Whether it’s savings, KiwiSaver withdrawals, or family gifts, these differences can lead to legal complications in case of separation. A contracting out agreement provides a clear path forward, safeguarding individual investments.
A contracting out agreement
For first-home buyers, varying contributions are common. A contracting out agreement offers a custom solution, ensuring fair treatment of each partner’s financial input, be it personal savings or family assistance.
In New Zealand’s legal system, the division of assets in a separation is governed by the distinction between relationship property and separate property. Relationship property, usually shared equally after three years of living together, includes the family home, family chattels, and any property acquired during the relationship. This rule applies to marriages, civil unions, and de facto relationships. Separate property, on the other hand, refers to assets owned individually before the relationship or received as an inheritance or gift. However, separate property can transform into relationship property, especially when used for the benefit of the relationship.
To navigate these rules and protect individual contributions, a contracting out agreement is essential. Such agreements allow couples to set their own terms for property division, deviating from the default equal division rule. These must be written, with both parties receiving independent legal advice, ensuring the agreement is fair and adheres to legal standards.
Here’s an example
Consider the case of Emma and Tane. Emma uses her savings and KiwiSaver for a $30,000 contribution, while Tane adds $125,000, partly from a family gift. Without an agreement, their individual contributions could be split equally if they separate. A contracting out agreement can respect their initial inputs while considering future equity gains.
For couples buying their first home with diverse financial backgrounds, contracting out agreements offer peace of mind and a clear, fair approach to asset division.
We are here to help
At Client Legal Solutions, we understand the pressures of purchasing a home. We offer a fixed price of $1,000.00, including GST, for a contracting out agreement solely dealing with an unequal contribution to a property purchase when you also engage us for the property transaction. This fee includes drafting the agreement and advising one party on its implications before certifying it as legally binding. Note that the other party will need to obtain independent legal advice, which will incur additional costs.
For tailored advice on your first home purchase and protecting your investments, contact Max Palzer.
