Country Estate, Farm, Homestead or Family Home?
What is relationship property?
If you reside on a property that is used for commercial activities, such as growing crops or grazing (or raising) animals, you may find that a portion of the land is not classified legally as relationship property to be shared equally in the event of separation. Relationship property legislation draws a distinction between the portion of the land that is principally used for household purposes, and any land that is not.
Where some of the land is used for commercial activities, and only some of the land is primarily used for the household, the land will be classified as a “homestead” and only the house and curtilage will be relationship property. The size of a property is not the determining factor.
In the event that there is disagreement about whether the whole of the land is relationship property, or whether a “homestead situation” arises where only some of the land is relationship property, it will come down to how the property is used.
- So – would your property be classified as relationship property in whole or only in part? Ask yourself these questions:
- Was the property in question acquired during the relationship? If so, it will likely be relationship property regardless of its use.
- Is the land in question subdivided? Only the unsubdivided portion on which the family home is located is capable of being classified as the family home.
Is the whole of the land (or any buildings or improvements) appurtenant to the family home used wholly or principally for the purposes of the household?
If the answer is yes then the whole land will be considered the family home and relationship property to be divided equally in the event of separation. If the answer is no then the property will be considered a homestead and only the portion used principally for the purposes of the household will be considered relationship property.
Despite the above, land that is not principally used for the purposes of the household may still be able to be the subject of a relationship property claim. An ex spouse or partner may be able to claim that because they undertook work on the property, or contributed funds towards the property that they should be entitled to a share of any increase in value in the property or a share of income from the property. In these circumstances a contracting out agreement can assist in protecting your interest in any such property provided that the agreement is signed at the beginning of the relationship and complies with the Property (Relationships) Act. Please feel free to contact us for more specific advice about what you can do to protect your interest in these circumstances.