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Buying and selling property can be stressful enough without an old flame jumping into the mix.

By Amanda Bradley Solicitor & Suzy Garnett, Solicitor

First published in The Press 28 May 2011

Don’t take anything for granted when love is thwarted. Tidy up the relationship property out of one relationship by completing a written relationship property agreement (rather than just a verbal division) before entering a new one. Even though you may think that your ex-partner is out of the picture, he or she may take action by lodging a notice of claim against the title to the property you own.

Imagine this scenario:

Brad ended his relationship with his girlfriend, Jenny, after four years. Jenny moved out of the house which Brad owned. They agreed that she would take all the items she brought with her or had bought during the relationship. Brad very quickly starts a relationship with Angela who had been an old friend.  The pair move into the house, marry and start a family. After two years, they decide they need a bigger house. They do up the house together and try to sell it. But Brad discovers he can’t sell the property because Jenny has put a notice of claim on the title under the Property Relationships Act.

A notice of claim is like a caveat, and prevents any dealings with the land, including the sale or a refinancing of the property by the registered owner without the agreement of the person who has lodged the claim. Basically, this notice of claim means that Jenny is claiming she still has a financial interest in the property and deserves some payout because she was in a de facto relationship with Brad.  Brad might have thought that he and Jenny were just boyfriend and girlfriend, however, Jenny considered that she had been in a de facto relationship with Brad.  Factors which determine a de facto relationship include:

• the length of the relationship;
• the extent to which they shared a home;
• the degree to which their finances were merged;
• how their property was owned and used;
• whether they had a sexual relationship;
• who performed household duties;
• their mutual commitment to a shared life;
• whether others saw them as a couple; and
• any other relevant matters.

Jenny would need to show that she had an interest in Brad’s property. Her claim is that Brad’s house was the family home and so was relationship property. If you are in a qualifying de facto relationship, the family home is always relationship property (with some exceptions), even if it is acquired by one partner before the relationship begins or by inheritance or gift. As relationship property, Jenny would be entitled to half of the equity in the family home.

Brad thought he and Jenny had agreed on the division of property when they separated and they could have resolved property matters between themselves at the end of their relationship. But for an agreement to be binding, it had to be in writing, signed by both Brad and Jenny. They also needed independent legal advice before signing the agreement. Each lawyer needs to sign the agreement and certify that they have advised each of party about their entitlements and explain the effect and implications of the agreement.

The bottom line:  If a partner enters into a new relationship and starts pooling property before property division for the former relationship has been finalised, then property from the earlier relationship must be sorted first.

If you find yourself in a position similar to that of Brad’s, make sure you protect your assets, and take legal advice on the status of a current or previous relationship and the nature of property in order to prevent making Brad’s mistake.  Make sure you disentangle your property from one relationship before you enter into another one.

Amanda Bradley is a solicitor in national and trans-Tasman law firm Duncan Cotterill. A.Bradley@DuncanCotterill.com

Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.