What Is A Cohabitation Agreement? Why Do We Need One?11th Apr 2019
Cohabitation Agreement: Definition
A cohabitation agreement is a formal legal document for unmarried couples who live together. These far-reaching agreements set out who owns what and who is entitled to what if the couple ever splits up. They are available for mixed-sex and same-sex couples.
Why Do We Need A Cohabitation Agreement?
You need one because there is no such thing in law as:
- cohabitants’ rights
- common law marriage rights
- common law marital status.
These expressions are all myths. Living with someone for years does not give you any special legal rights.
Under UK law, cohabiting couples do not enjoy the same legal rights as married (or civil partnership) couples. So if you want to put some legal protection in place, you will need a cohabitation agreement.
Most unmarried couples who take out one of these agreements do so because they want to legally define and protect their share of the property they live in (and other shared assets) should they decide to separate and end their relationship.
Rising property prices have made these agreements more important. That is because more couples are relying on ‘the bank of Mum and Dad’ to help them fund a mortgage or rent deposit
The parents want to be sure that their investment in the property will remain in the family should their child split from the person they live with.
The parents don’t want the large sum they have invested in their child’s home to be split 50/50 and the estranged partner to walk away with half their money.
You don’t have to own a property to have a cohabitation agreement. They are also useful for couples who rent their home or share a home with someone else.
What’s The Difference Between A Cohabitation Agreement And A Declaration Of Trust?
You and your partner may already have signed a declaration of trust for your mortgage. This sets out your legal interests in the property you jointly own.
The term used is ‘tenants’ (even though you own the property rather than rent it). There are different ways of collectively owning the property – either as joint tenants or tenants in common.
Sounds just like a cohabitation agreement doesn’t it?
So why would you need a cohabitation agreement if you already have a declaration of trust? What’s the difference?
A declaration of trust covers only your property. But a cohabitation agreement encompasses much more – potentially any aspect of your lives that you want to include in it.
What Is Usually Included In A Cohabitation Agreement? What Will It Mean For Me?
These agreements can cover a long list of important considerations: all the things that can cause rows between couples (or can make a break-up more complicated and stressful).
The aim of the written agreement is to make it clear who is responsible for what – reducing the possibility of misunderstandings and arguments later one. It can include:
- What will happen to assets owned by each partner before the cohabitation?
- What will happen to assets acquired during the cohabitation?
- What happens to your incomes during the relationship – will they remain separate? Will there be a joint bank account?
- Who pays the bills – will one person pay? Will the bills be shared? And if so, shared 50/50 – or 70/30 or 80/20, for example?
- What happens if one of you carries out repairs to the property or adds an extension, conservatory or shed? Does this investment of time and money entitle your partner to a share if the property is sold?
- What about debts? Will they be a joint liability or will each partner be responsible for their own debts?
Does A Cohabitation Agreement Offer As Much Legal Protection As Marriage?
No – but it is a start. Marriage offers important rights (and financial benefits) which are recognised in UK law.
A cohabitation agreement is something drawn up by a solicitor to suit your specific requirements – and these will differ from couple to couple.
Is A Cohabitation Agreement Legally Binding?
No, it is not (at least not yet) – but family courts look at them very closely when deciding on children arrangements and how assets should be divided when couples split up. These agreements make the process much faster (and therefore cheaper) and less stressful.
Courts take notice of these agreements. We recommend that you do too – they are useful.
How Much Does A Cohabitation Agreement Cost? How Long Does It Take?
Cohabitation agreements cost £1,000 inc VAT, or up to £2,000 inc VAT if your arrangements are more complex and require extra legal work.
Remember that even the most complex agreement is far cheaper than losing a share of your property!
Drawing up a cohabitation agreement usually takes around two to three weeks but this process can be speeded up if circumstances call for it.
If you already have an agreement in place, you should review it every three to five years because your financial and family circumstances will change.
What Is A Cohabitation Contract?
This is a misnomer. There’s no such thing. A cohabitation agreement is precisely that – an agreement – but it is not a contract in the legal sense of the word.
How To Get A Cohabitation Agreement
Find out whether a cohabitation agreement is right for you. Book a free chat with one of our family law team.
For more information, contact Coles Miller Partner Richard Perrins, head of our Family Law Department, 01202 355698.