Cohabitation Agreements

A Cohabitation Agreement is a contract between two people who are planning to live with each other or are already doing so.

It sets out your intentions regarding the ownership and division of assets and joint purchases, as well as your responsibilities regarding upkeep, payment of bills and debts. They are commonly used by couples who are purchasing or renting a property together, but can also be prepared for friends and family members who decide to do the same.

A Cohabitation Agreement protects you both legally and will help to ensure that you share the same views about your roles and responsibilities, which is particularly important if you plan to have children together.

Why do couples need a Cohabitation Agreement?

The simple answer is to protect each other.  Despite the widespread misconception about "common law marriage", you are not legally recognised as a couple unless you are married or in a civil partnership and you will have far fewer legal rights.  This can make things difficult if you separate and disagree on how to divide your assets and possessions or who is responsible for debts, especially if there is no documentation to verify your position.

Because the law for couples who cohabit is complicated and uncertain, disputes between unmarried couples can be more complicated and take longer to resolve through the court than if the parties were married. The costs involved can force people to walk away from what should be theirs or pay debts that should not be theirs, making an already difficult situation even worse.

A properly prepared Cohabitation Agreement can protect you from this.  As it is a legal contract, it will usually prevent the need to go to court, or at least drastically reduce your time before a Judge.

In addition, the discussions you have when you prepare your Cohabitation Agreement will help to ensure you have realistic expectations about the contribution you will each be making to the relationship. 

Cohabitation Agreements are also an effective way for unmarried couples to protect children (further information below).

What happens if I move into my partner’s property or they move into mine?

This can be a tenuous situation for both of you, so it is advisable to set out your intentions from the outset.

A common misunderstanding occurs when the non-owner pays the owner a monthly sum which they believe is a contribution to the mortgage entitling them to a share of the property, but the owner considers this to be rent with no associated property rights.  You should be aware that if the non-owner can show that they have paid towards the property, through the mortgage, utility bills or for any work that increases its value (a loft conversion for example), they could claim a beneficial interest if the property were sold.  This is not guaranteed, but it is advisable not to leave it to chance.

Another situation to be aware of should the relationship end, is that you would have to give/be given (depending on if you are the property owner or not) reasonable notice to find somewhere else to live and in the meantime, the non-owner may be legally entitled to remain living at the property. This notice period can be determined by the Courts, so it makes things simpler if you have already agreed a set period within a Cohabitation Agreement.  If the non-owner does not leave after the agreed period, they would be considered a trespasser and could be evicted from the property.

Buying or renting a new house together?

If you are renting a property together it is recommended that both names are put in the tenancy agreement to protect you both.  This will ensure you are jointly liable for the rent and prevents one person from evicting the other if there was a dispute.  This can be important for couples renting with children who need to ensure that their children will not become homeless overnight, and they cannot be forced to leave them.

If you are buying a property, there are two ways to purchase it:

  1. Joint Tenants: this is where both parties own the property equally (50:50) and if one owner dies their share of the property automatically passes onto the other. This is usually recommended to couples, but it does not enable you to adjust your share of the property so it may not be suitable if one partner has or will be investing significantly more than the other.
  2. Tenants in Common: this enables partners to choose their share of the property, which means that one person might have a bigger share than the other, or there could even be other investors such as parents. This does not affect either person’s right to live at the property, it simply reflects the percentage of the value you would each be entitled to should the property be sold. It is recommended that you both sign a Deed/Declaration of trust to help establish a clear understanding of financial responsibility towards the property – but this does not remove the need for a Cohabitation Agreement. You should also be aware that your share would not automatically pass to your partner if you passed away so you would need to prepare a Will if you wanted this to happen.

How can a Cohabitation Agreement protect children?

If you decide to have or already have a child together, the Mum will be granted Parental Responsibility for the child automatically – which is the rights and responsibilities to care for, make decisions on behalf of, protect and provide for a child.  Dad’s will only gain parental responsibility by being named on the birth certificate, being married to the mother at the time of birth or entering in a parental agreement.  This can leave Dads and children vulnerable.

A Cohabitation Agreement is a useful tool for parents to agree their roles and responsibilities towards their children, over and above the legal requirement to provide for them, should they separate.  You can include all aspects of care for your children, including where they would live and how much time they would spend with each parent. 

A Cohabitation Agreement is particularly important if you have a shared expectation that your children will be raised in a lifestyle that can only be afforded by one parent, for example if they are receiving a private education funded by a parent with higher earnings, and you wish to ensure that this will continue irrespective of your relationship.

If you or your partner has a child from a previous relationship, you are not recognised in the eyes of the law as their guardian or stepparent (as you would be if you were married to their parent) and do not have any rights or responsibilities towards them.  There are several routes to agreeing a level of responsibility including setting this out in a Cohabitation Agreement.

Can we change our Cohabitation Agreement once it has been signed?

Your Cohabitation Agreement should grow and change with you.  As long as you both agree, it can be modified at any time but should almost always be updated if there are significant changes to your lives, for example if a child is born or if someone’s financial situation changes.  Keeping the agreement up-to-date ensures you remain on the same page about your roles and responsibilities, as well as minimising the possibility of a protracted legal dispute.

The law may also change, so regardless of changes to your situation, it is advisable for a professional to review your arrangements from time to time to ensure they are still valid.

If you decide to get married or become civil partnered your Cohabitation Agreement will become invalid, so you may wish to replace it with a Pre-Nuptial or Post-Nuptial Agreement.

Final thoughts

Although it does not come naturally to consider the end of a relationship when you are at the beginning, it should be easier to agree what is fair when you are working as a team.  For most people preparing a Cohabitation Agreement together is a bonding experience that ensures they are on the same page and have realistic expectations about their future together. 

If you are in a loving relationship, it is also advisable to prepare a Will to protect your partner, who will not be your legal next of kin, as well as to ensure that any children can be looked after in the way you intend.  You may also wish to nominate your partner as a beneficiary of your pension or for any death in service benefit that you might receive.

Legal Advice

For further advice on cohabitation agreements or disputes, please contact Louise Allard or Sabrina Bailey on 020 7993 2936 or complete a contact form.

Filed Under: Insight

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