Should your Relationship Property Agreement have a review clause or a sunset clause?
Almost always, yes – and which kind matters less than having one at all. Without a built-in way to revisit or expire the agreement, you are signing up to be bound by a document that may look very different from what you would have agreed to in fifteen years’ time.
A section 21 agreement (sometimes called a contracting-out agreement, or the more colloquial ‘pre-nup’) sets out how you and your partner have agreed to divide your property if you separate, or one of you dies. The whole point of these agreements is certainty: knowing in advance how property would be divided. The trade-off is that the certainty hardens over time, whether or not the underlying picture still matches.
People grow. Wealth shifts. Children arrive. Someone leaves a career to do the unpaid work of holding a family together. An agreement that was perfectly sensible at year three can look indefensible by year fifteen.
Why this matters legally
Under section 21J of the Property (Relationships) Act 1976, a court can set aside a validly signed agreement if giving effect to it would cause ‘serious injustice’. One of the factors the court has to weigh is whether the agreement has become unfair due to a change in circumstances since it was signed (s 21J(4)(d)).
The threshold is deliberately high. The party asking the court to throw out the agreement has to prove it. But it’s not impossible. In TT v LAT [2008] NZFC 99, a 17-year marriage with very little property accumulated outside the original agreement was enough for the court to look closely at whether the agreement had become unfair.
The longer your agreement has been sitting in a drawer, the more vulnerable it is to that kind of challenge. A review or sunset clause is built specifically to address that risk.
A review clause
A review clause is a mandatory check-in. You and your partner agree to sit down at a set time (or after a set event) and decide whether the agreement still works. You might keep it as it is, tweak it, or replace it entirely.
Triggers are usually a fixed period (every five years is common), a life event (birth of a child, sale of the family home, change of employment), or both.
The catch: if you have a review clause and don’t actually do the review, that failure becomes evidence against you. The Court of Appeal has treated a failure to honour a review clause as a relevant complaint in a serious-injustice claim (M v H [2018] NZCA 525). You both agreed to revisit the deal. The certainty it gave you was conditional on that review actually happening.
A sunset clause
A sunset clause is more brutal. It says the agreement, or part of it, will simply expire at a particular date or trigger. After that, the standard rules under the Property (Relationships) Act apply as if the agreement had never been signed.
A sunset clause makes most sense where the reason for the agreement was time-limited from the start. A common example: one partner wants to ring-fence assets owned before the relationship began, but only while the relationship is still relatively new. After ten years together, both partners might be comfortable letting the standard regime apply.
The catch with a sunset clause is different. You don’t have to actively do anything – the agreement just expires. The risk is forgetting it’s coming. People sometimes can’t remember what they signed a decade ago, and the trigger lands whether they have thought about it or not.
What if your agreement has neither?
The risk of an agreement becoming unjust over time doesn’t disappear just because you didn’t write either kind of clause into it. You are still exposed to a serious-injustice challenge if circumstances have changed enough. You just don’t have a contractual nudge to update the agreement before it gets to that point.
In LM v The Public Trust, the court noted that the original legal advice hadn’t even raised the option of a review or sunset clause, and treated that as a deficiency in the advice.
What we usually recommend
Include one or the other. Which one depends on what the agreement is doing.
If the agreement is protecting a specific asset for a specific season of life, a sunset clause is often the cleaner option. If it’s a longer-term framework that you want to keep updating as life changes, a review clause is the better fit.
Whichever you pick, put it in the calendar. Set a reminder. When the trigger comes around, ring your lawyer. A short letter on file saying ‘we have reviewed our agreement and confirm it still reflects our intentions’ is much cheaper than a serious-injustice claim ten years down the line.
If you already have an agreement and you’re not sure whether yours has either kind of clause, dig it out and check. If it has been sitting in a drawer since 2014, that’s worth a conversation.
If you don’t have an agreement but think you should, book a Smart Start Meeting with our team!
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