Do I Need a Contracting Out Agreement or Property Sharing Agreement?

Understanding Relationship Property Law

Once a relationship reaches the relevant Property (Relationships) Act 1976 threshold, relationship property is generally divided equally unless the Act, a court order, or a valid contracting-out agreement leads to a different result. The rules can also apply in some shorter relationships, so legal advice matters before relying on a simple 3-year rule.

What is a Contracting Out Agreement (COA)?

For couples purchasing property with unequal contributions, a contracting-out agreement ("COA") may be the relevant legal tool. It can be made before or during a relationship and can record how specified property will be treated if the relationship ends, but it must satisfy the Act's formal requirements, including independent legal advice for each party.

A separation or relationship property agreement ("RPA") is what is entered into when a couple decide to separate and they want to document the agreement made between them to divide their relationship assets.

When Are COAs Commonly Used?

COAs may be considered where people want to record how existing property, family gifts, inheritances, assets for children from previous relationships, or future property should be treated. Whether a COA is suitable depends on the relationship, the property involved and the legal advice each person receives.

Common Misconceptions

It can be useful to get advice on how the Act may affect you before a relationship reaches the 3-year mark, especially if you are buying property, receiving family help, or making unequal contributions.

Some buyers rely on the generic "it has not been 3 years yet" rule. That can be risky because the Act can apply to shorter relationships in special circumstances, and relationship-property planning is usually easier before a dispute or settlement deadline.

These conversations can be difficult, but they are better handled with clear legal advice before expectations harden or money changes hands.

What is a Property Sharing Agreement (PSA)?

For siblings, friends or other groups buying together, ask a lawyer about a property sharing agreement ("PSA") or co-ownership agreement before committing to the purchase.

In simple terms, a PSA is a written agreement that outlines how two or more people will share ownership, use, costs and decisions for a property. It is commonly used when friends or family buy together and need clarity about shares, responsibilities and exits.

The goal of a PSA is to record everyone's rights and responsibilities for the property. It can reduce uncertainty, but it still needs careful drafting and legal advice because co-owners can remain jointly liable for mortgage obligations.

Costs

Before signing, ask for a quote and confirm how legal fees will be paid. Do not assume a lender contribution will cover the cost or that one lawyer can advise every party on the same terms.