Could You Be in a de Facto Relationship and Not Know It?

People typically ask this question and seek our advice at one of two points – before they start living with their partner or at the end of the relationship.

When people speak with us they may be concerned about and looking to avoid being considered to be in a de facto relationship to ensure the preservation of assets if the relationship were to break down. Other times they may be seeking advice about the potential consequences of moving in together. Alternatively, they may want to determine if their former partner is likely to be able to make a claim for property settlement.

There are a number of misconceptions about what a de facto relationship is, because of what people hear from family, friends or what they see in the media. Below is what you should know about de facto relationships in Australia.

What constitutes a de facto relationship?

A de facto relationship is a relationship between two people – regardless of gender who are not married and not related, and are living together on a ‘genuine domestic basis’. This phrase is from the Family Law Act 1975 and it is the overarching question that needs to be asked to determine if you are in a de facto relationship.

What does ‘genuine domestic basis’ mean?

This means we are looking at how the relationship is distinguished from other forms of relationships, such as with someone you are casually dating or with a housemate. Some of the indicators considered are whether there is a mutual intention to share a life together, how long they have been in a common residence, whether they are having a sexual relationship and whether there is any financial dependence, interdependence or support. We also look at what they have done in regard to household duties or the public aspects of the relationship. If people in their wider circle know them to be a couple, for example, they socialise together and go to each other’s family events, coupled with the other indicators, they are likely to be considered to be living together on a ‘genuine domestic basis’.

However the lines can be blurred given the way society is today and the different types of relationships that exist.

Sometimes people are living together but unsure if their relationship is considered a de facto relationship. Less commonly, there are married people who are also in a second relationship that is a de facto relationship or perhaps there are people who might be considered to be in two de facto relationships. With so many variations in relationships, when determining if there has been a de facto relationship, a Court has to consider a number of different factors.

When is a relationship considered ‘de facto’?

The most well-known rule of de facto status is when two people have been living together continuously for more than two years. What you may not know is that the two-year rule does not apply when any of the following occurs:

If a couple have a child together even though they have not yet been living together in a relationship for two years, they are considered to be in a de facto relationship; and

If two people decide they are going to move in together and a purchase a property in both names from the outset or, they have been living together and then decide to buy a property together before that two year period has passed.

If two people are living together, even if not for two years and are substantially intermingling their finances, including acquiring joint property together and operating a joint bank accounts etc, that can also indicate that they may be considered to be in a de facto relationship and could potentially make a property settlement claim.

When people live together and substantially intermingle their finances, it muddies the waters when determining the nature of their relationship if they haven’t yet been living together for over two years.

Less common is when people have registered their de facto relationship. It is rare but the idea behind doing that is so they do not need to have the argument about whether they are in a de facto relationship or not, later on. We have had clients in the past where people were living together, but say they were not in a de facto relationship. An situation where this could arise is where people start out as flatmates, then had some form of sexual relationship, but never had the intention of living together on a genuine domestic basis.

So you can see how the waters can become increasingly muddied given the different nature of relationships.

I’m thinking of moving in with someone, what should I be doing?

When people come to us for advice before moving in with their partner we talk to them about their goals in the short and long term, how serious the relationship is and how long they have been together.  We discuss the benefits of largely keeping their finances separate until they have a plan about how they wish to approach things further into the relationship. We also talk to them about whether they might want an agreement drawn up (typically referred to as a Financial Agreement) for how they might wish to work through things in the event of the relationship breaking down.

If a de facto couple separate, if there is no agreement in place about how they work through things, one or both parties may consider seeking a property settlement.  If no agreement can be reached a Court application is filed, this area of the law is a highly discretionary area. The way the couple have operated their finances, including whether they have substantially intermingled their property or kept their property and finances separate is a key consideration as to approach to be adopted.

There are risks involved in intermingling your property early on in a relationship or purchasing property together without a plan or exit strategy if things don’t go to plan.

If you or someone you know is looking to move in with their partner or are already living with their partner, share this article with them. It is important to be aware of the circumstances where a relationship may start to be considered to be a de facto relationship and to seek initial advice about your specific situation. Once you enquire about your relationship, know that this does not mean your are obliged to take any further steps. Rather it allows you to be informed before you act. It is wise to enquire about your own unique situation to get clarity about how your relationship will be viewed by law and if required, take steps to ensure your assets can be protected in the event of the relationship coming to an end.