The Three-Year Rule: De Facto Relationships and Your Assets
⚖️ What the Three-Year Rule Means
Many New Zealanders assume that living together is nothing like being married when it comes to money and property. That is not how the law works. Under the Property (Relationships) Act 1976, once a de facto relationship has generally lasted three years, the Act applies and relationship property is usually divided equally on separation, in exactly the same way as it is for married couples and civil union partners. That means the house, the savings, the KiwiSaver built up during the relationship and much more can be split 50/50, even if only one of you earned the money or holds the title. This guide explains what counts as a de facto relationship, when the three-year clock brings the Act into play, what is relationship property as opposed to separate property, the exceptions where the split is not even or the rule bites early, and how a section 21 agreement lets a couple set their own rules. The practical money lesson runs through all of it: understand this before you move in together or buy a home together, not after a relationship ends. This is general information, not legal advice, so see a family lawyer about your own situation.
How This Guide Fits With Our Others
This guide is about the three-year threshold and how the law treats your assets. For the wider money side of a break-up, such as splitting bank accounts and debts, sorting child support and updating benefits, read our separation and divorce finances guide. For dividing KiwiSaver specifically, see splitting KiwiSaver on separation. Where an inheritance is involved, our guide to how inheritance works explains how it can lose its protected status.
The Same Rules as Marriage
The Property (Relationships) Act 1976 covers married couples, civil union partners and de facto couples alike. The Act starts from a simple principle: the contributions each partner makes to a relationship are treated as equal, whether they are financial, like earning a wage, or non-financial, like raising children and running the home. That is why relationship property is presumed to be divided equally. For a de facto couple, the main difference from marriage is the three-year gateway that has to be crossed before the equal-sharing rules apply.
Whose name is on the house, the car or the bank account does not decide who owns it under the Act. What matters is whether the asset is relationship property. An asset in one partner's sole name can still be shared equally on separation.
🏠 De Facto, Relationship Property and Separate Property
Two questions decide almost everything: are you in a de facto relationship, and which of your assets are relationship property. The Act sets out how the courts answer both.
What Counts as a De Facto Relationship
A de facto relationship is two people aged 18 or over who live together as a couple and are not married to each other or in a civil union. There is no single test. The court weighs a list of factors and no one factor is decisive, so a couple can be de facto even if they do not tick every box. The factors include:
- How long you have been together and whether you live together
- Whether there is a sexual relationship
- How financially dependent or interdependent you are, and any financial support between you
- Whether you own, use or acquire property together
- Your degree of mutual commitment to a shared life
- Whether you care for and support children together
- Who performs the household duties
- How the relationship looks to family and friends in public
Because the test is about the reality of your life together, a couple can be in a de facto relationship without ever calling themselves that. The three-year clock generally runs from when the de facto relationship began, not from when you first noticed it mattered.
Relationship Property vs Separate Property
Once the Act applies, your assets fall into two buckets. Relationship property is shared, usually equally. Separate property stays with the partner who owns it.
| Usually relationship property (shared) | Usually separate property (kept) |
|---|---|
| The family home, however and whenever it was bought | Property owned before the relationship (except the family home) |
| Family chattels: cars, furniture, appliances, household items | Gifts and inheritances received during the relationship, if kept separate |
| Income earned and savings built up during the relationship | Property acquired from separate property and kept apart |
| KiwiSaver contributions made during the relationship | Assets covered by a valid section 21 agreement |
The family home is relationship property no matter who bought it or when. If one partner owned the house before the relationship and it becomes the home you live in together, it usually becomes shareable once the relationship reaches three years. Many people are shocked to learn a house they bought alone can be split in half. If that could be you, get advice about a section 21 agreement before moving in.
When Separate Property Becomes Shared
Separate property does not always stay separate. If you mix it into the relationship, it can turn into relationship property. A common example is an inheritance: if you keep it in your own account it usually stays yours, but if you use it to pay down the mortgage on the family home or pour it into a shared renovation, it can lose its protected status and become shareable. Our inheritance guide covers this in more detail.
📋 Exceptions and Contracting Out
The three-year rule and the equal split are the starting point, not an unbreakable law. There are situations where the Act applies earlier than three years, where the split is not 50/50, and where a couple sets their own rules by agreement.
When the Act Applies Before Three Years
A de facto relationship of short duration, meaning under three years, is usually outside the Act. But a court can still apply it early if both of these are true:
- There is a child of the relationship, or one partner made a substantial contribution to the relationship, and
- the court is satisfied that not making an order would cause serious injustice.
There is an important twist. When the Act applies to a short relationship, property is divided according to each partner's contributions rather than automatically 50/50. Financial and non-financial contributions still count equally, so caring for a child is weighed alongside paying the mortgage, but the even split is not guaranteed the way it is after three years.
When the Split Is Not 50/50
Even in a relationship of three years or more, equal sharing is a presumption, not a certainty. The main exceptions are:
- Extraordinary circumstances: a court can divide relationship property unequally where equal sharing would be repugnant to justice. The bar is deliberately high, so this is rare.
- Economic disparity: if the way you divided your roles during the relationship leaves one partner much worse off in income and living standards afterwards, for example because one gave up a career to raise children, the court can order a payment to help close the gap.
- Short relationships: as above, under three years the split follows contributions rather than an even division.
The Act deliberately values the stay-at-home partner's work the same as the earner's. You do not get less because you earned less or held no title. That is the whole point of the equal-sharing rule, and it is why the family home and the savings are usually split down the middle.
Contracting Out: The Section 21 Agreement
Couples do not have to accept the Act's default rules. A section 21 agreement, often called a pre-nup or a cohabitation agreement, lets you decide in advance how your property will be divided if you separate or one of you dies. It is the main way to protect a home, a business or an inheritance you bring into a relationship.
For the agreement to be valid, strict rules apply:
- It must be in writing and signed by both partners.
- Each partner must get independent legal advice from their own separate lawyer before signing.
- Each lawyer must witness the signature and certify that they explained the effect and implications of the agreement.
Even a properly signed agreement is not bulletproof. A court can set it aside if giving effect to it would cause serious injustice, so an agreement that is wildly one-sided may not hold. Get it done well, keep it fair, and review it if your circumstances change a lot.
An agreement is generally void if a partner did not get independent legal advice before signing. Using the same lawyer as your partner, or skipping advice to save money, can undo the whole agreement later. The legal cost of doing it properly is small next to the value of the assets it protects.
🔢 Four Worked Examples
These examples show how the rules play out. The figures are illustrations, and every real case turns on its own facts, so treat them as a guide to the principles rather than a prediction.
Situation: Maia and Tane lived together for four years, then separated. There is no agreement. Because the relationship lasted more than three years, the Act applies and relationship property is shared equally.
Situation: Priya and Sam lived together for two years and have a baby. Under three years, the Act usually would not apply. But there is a child of the relationship, and Priya cut back her paid work to care for the baby while Sam kept earning and paying the mortgage, so not sharing the property would cause serious injustice.
A child of the relationship can bring the Act into play well before three years. The division follows contributions rather than an automatic 50/50, but because caregiving is valued equally with paid work, the outcome can still be close to even. The exact split depends on the facts, which is why advice matters.
Situation: Liam bought a house on his own before he met Ana. She moved in, it became the home they shared, and they were together for five years with no agreement. On separation, Liam assumes the house is his because he bought it. He is wrong.
This is the outcome that catches people out. Because the house became the family home, Liam's earlier ownership does not shield it once the relationship passes three years. A section 21 agreement signed before Ana moved in could have kept the pre-relationship equity as Liam's separate property. Without one, it is shared.
Situation: Grace owned a mortgage-free home worth $600,000 and a small business before meeting Noah. Before moving in together, they signed a section 21 agreement. Each kept their own pre-relationship property, and they agreed to share only what they built together. Both had independent legal advice from their own lawyers, who certified the agreement. Five years later they separated.
Read more on the money side of a break-up in our separation and divorce finances guide, learn how retirement savings are divided in splitting KiwiSaver on separation, and see how gifts and estates are treated in how inheritance works in New Zealand.
Sources: Verified July 2026 against the Property (Relationships) Act 1976 on legislation.govt.nz, the Community Law manual (how the Act works, exceptions to equal sharing, and contracting out), and the Ministry of Justice at justice.govt.nz. This guide is general information, not legal advice. Speak to a family lawyer about your own circumstances.
🎯 Test Your Knowledge
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Related guides
- End of Financial Year Checklist - New Zealand, a related guide in the same area.
Related tools and guides
- Separation asset split calculator: what an equal split actually looks like.
- Co-ownership equity share calculator: recording unequal contributions before it matters.
Situations like yours. The 4 situations worked through above sit alongside 22 more about separation, death and estates, each with the sums shown.