As Family Law expert, Gemma Purt explains a cohabitation agreement can be a good way for unmarried people living together to put some protections in place for their future and to ensure that things will be handled fairly in the event of a relationship breakdown.
Married couples are protected by certain legal rights if and when they separate (with further legal protection afforded by additional agreements such as prenuptials). But what happens when an unmarried cohabiting couple breaks up?
Unfortunately, cohabiting partners are not entitled to any special rights by law - and the idea of ‘common law’ marriage is no more than a popularly repeated myth.
In this article, we will look at what cohabitation agreements are, what they do, and whether you really need one.
What is a cohabitation agreement?
In much the same way that a marrying couple might draw up a prenuptial agreement specifying how assets would be divided in the event of a divorce, a cohabitation agreement is a similar legal document for unmarried partners living together.
In other words, a cohabitation agreement will lay out ahead of time what will happen in the event of a breakup between unmarried cohabitants. It can also clarify each partner’s commitment to shared financial obligations (such as paying rent or bills) and other aspects of the relationship.
Often (but not always), the decision to obtain a cohabitation agreement is made when couples reach a significant milestone in their relationship - such as the arrival of children, or a resolution to not get married.
Are cohabitation agreements legally enforceable?
Cohabitation agreements are legally binding and in most situations fully enforceable in court and
provided the cohabitation agreement has been created correctly, the court is likely to enforce the terms of the agreement.
There is a requirement that both partners have received independent legal advice and have been honest about their financial situation. A cohabitation agreement may not be upheld if it transpires that one partner was unclear on the terms or was unaware of the other party’s fiscal resources.
It is important to note that a cohabitation agreement must be kept up to date with significant life changes. For example, if one partner has had a major change in financial circumstances since the creation of the document (such as the loss of a job, or a lucrative new promotion), the original agreement may be found to be unsuitable for use.
Who does a cohabitation agreement protect?
A cohabitation agreement can be created to protect either partner, or both.
Often, an agreement may be created to protect an individual who is less financially secure than their partner - or to ensure that both partners are clear about whose assets are whose. Cohabitation agreements can be particularly useful when one or both parties have children from a previous relationship and where a party wishes to protect assets for those children.
Another example may be if one partner lives in a property owned by the other, but pays utility bills, they may feel that they have an entitlement to a share of the property itself. Without cohabitation agreement in place, by default they would have no legal right to the property at all - and so drawing up an agreement can help to clarify these types of ambiguities and clear up potential conflicts later on.
If two cohabiting partners own property together and go on to break up, the property ownership will usually be divided 50-50 between the two of them (even if one party put in a lot more money than the other). This type of unfair situation can be pre-emptively avoided with the creation of a cohabitation agreement to spell out who owns what, and in what proportion.
What should be included in a cohabitation agreement?
Cohabitation agreements can take many forms and fulfil many purposes, so there is no one-size-fits-all document.
However, a cohabitation agreement will often include the following:
- Property bought during the cohabitation period - if property has been purchased during the cohabitation but only one partner is named on the agreement, should the other have a claim to a share of the ownership? If there is a breakup, should the property be sold?
- Property owned prior to the cohabitation period - if one partner already owns property before cohabiting, they may wish to ensure this is not eligible to be shared in the event of a breakup.
- Utility and other household bills - if one partner pays all the bills but does not technically own the property, should they have any claim to a share of the home? A cohabitation agreement can set out a clarification.
- Assets such as cars, jewellery, and so on - An agreement can spell out unambiguously who owns what.
- Legal advice - both partners should receive separate legal advice when creating a cohabitation agreement. This ensures that the document is created in the genuine interest of both parties.
Is a cohabitation agreement truly necessary?
As with prenuptial agreements, cohabitation agreements can be thought by some to be unromantic - and when one is in a happy relationship, it is easy to imagine that nothing will ever go wrong.
However, creating a cohabitation agreement is simply a pragmatic concern and is about much more than selfishly asserting “this is mine, and my partner can’t have it”.
A cohabitation agreement can work to the benefit of both partners and provide peace of mind that provisions are in place even if the worst were to happen.
Particularly for couples who jointly own property or other assets (or have shared commitments) obtaining a cohabitation agreement is something that ought to be seriously considered.
If anything, the process of creating the document - of sitting down together to talk frankly about finances and concerns - can strengthen a relationship by reassuring each party that that they will be fairly provided for should they break up in the future.
An appropriately drafted Cohabitation Agreement can save a couple thousands of pounds in contested legal proceedings should they break up in the future and the added stress and anxiety of those court proceedings.
A cohabitation agreement should always be created with the help of an experienced family law solicitor. By seeking professional help, both partners can be assured that the document will be created in the best interests of everybody and will be upheld in court.
After all, the end of a relationship can be a very intense, emotional, and disruptive stage in one’s life, particularly if children are involved. The last thing anybody wants is a legal battle, a situation that can often be avoided entirely with the creation of a cohabitation agreement.
For further advice on cohabitation agreements, please contact a member of our Family Law team.