Contracting out agreements: what they are and who needs one

Most people have heard of a prenup. Fewer people realise that in New Zealand the same idea applies to couples who have never married, never plan to, and may not even think of themselves as a couple in any formal sense.

Under the Property (Relationships) Act 1976, once you have been married, in a civil union, or living together as a de facto couple for three years, the starting point is that your relationship property is divided equally if you separate. That usually includes the family home and the family chattels, even if one of you paid for them outright. The Act does not ask who earned more or who brought what in. It presumes you contributed equally, in different ways, and it divides accordingly.

For many couples that is a fair result and no agreement is needed. For others it produces an outcome neither of them would have chosen. A contracting out agreement, often called a section 21 agreement or a relationship property agreement, is how you set your own rules instead.

What a contracting out agreement actually does

The agreement records what each of you owns, what will be treated as separate property, what will be shared, and how it is all divided if the relationship ends. You can keep things simple by ring-fencing one asset, or you can set out a full framework covering everything you own now and everything you acquire later.

You can also deal with what happens on death, and this is worth taking seriously. The Supreme Court confirmed in 2026 that a well drafted agreement can determine what a surviving partner receives from their partner's estate, not just what happens on separation. That makes the agreement and your will two halves of the same plan.

Who should think about one

The clearest cases are these.

You are entering a relationship later in life with assets you built on your own, or with children from an earlier relationship you want to provide for. Without an agreement, the law may direct a share of what you own to your new partner rather than to your children.

One of you is putting significantly more into the home. A deposit from savings, an inheritance, or help from parents can lose its separate character once it goes into a jointly occupied house. Parents who help their children into a first home often want this addressed, and it is a reasonable thing to ask about.

You own a business, a share in a company, or a professional practice. Growth in the value of a business during a relationship can become relationship property even if your partner has never been involved in it.

You have assets in a family trust, or you are a beneficiary of one. Trusts are not the shield people often assume. An agreement makes the position explicit.

You are already separated and reaching a settlement. That is a separation agreement, made under the same part of the Act, and the same formal requirements apply.

What makes an agreement binding

This is where DIY templates come unstuck. The Act sets out specific requirements, and an agreement that misses them can be treated as void.

The agreement must be in writing and signed by both of you. Each of you must have independent legal advice, from different lawyers, before you sign. Each lawyer must witness their own client's signature and certify that they explained the effect and implications of the agreement to that person. One lawyer cannot act for both of you.

Even a technically valid agreement can be set aside by the court if giving effect to it would cause serious injustice. The court looks at things like how long ago the agreement was made, whether circumstances have changed dramatically since, and whether the agreement was one sided at the time. Agreements are far more robust when both people had genuine time to consider them, real disclosure of what the other owned, and no sense of being rushed.

That last point is practical rather than legal. An agreement produced three days before a wedding, or the morning of a settlement, is more vulnerable than the same agreement signed two months earlier.

Timing

You can enter an agreement before you live together, during the relationship, or after separating. There is no deadline. But the useful moments tend to be when something is about to change: moving in together, buying a property together, one of you selling a property you owned alone, receiving an inheritance, starting a business, or blending two families.

If you are approaching the three year mark and have not turned your mind to it, that is a good prompt to get advice.

Agreements are not set and forget

Circumstances change. An agreement written when you were renting and both working full time may read very differently fifteen years later with a mortgage, children, and one of you having stepped back from paid work. The longer an agreement goes unreviewed, the more likely a court is to find that enforcing it would be unjust.

We suggest reviewing your agreement whenever your circumstances shift materially, and at least every five years alongside your will and your enduring powers of attorney. All three documents should tell the same story.

Talking about it

Raising the subject can feel unromantic. In practice the conversation is usually less difficult than people fear, and the process forces a level of financial honesty that most couples benefit from. Knowing where you both stand tends to reduce anxiety rather than create it.

It is also considerably cheaper and less painful to agree terms while you are getting on than to argue about them when you are not.

Talk to us

We prepare contracting out agreements and separation agreements, and we give independent advice to people whose partner's lawyer has prepared one. If you are moving in together, buying a property, entering a new relationship, or you have an agreement that has not been looked at in years, get in touch and we will talk it through.

This article is general information only and is not legal advice. Please contact us for advice on your own circumstances.