Do I need a Cohabitation Agreement?

Unlike married couples, unmarried couples in England and Wales do not have any legal rights if they separate.

It’s a common misconception that if a couple has been living together for a number of years, they have a  ‘common law marriage’ and they are entitled to financial support and a share of the other’s assets. 

This is not the case under the current law, as their relationship has no legal status. Therefore, a breakdown in the relationship, or the death of one partner could result in financial difficulty.

For this reason, we strongly advise unmarried couples to consider drawing up a Cohabitation Agreement.

What is a Cohabitation Agreement?

A Cohabitation Agreement – sometimes known as a Living Together Agreement –  is a legal contract between unmarried partners that outlines their financial and property arrangements not only while they live together, but also in the event of a separation. It sets out, amongst other things, how both parties will contribute towards mortgage, rent and bills and how assets should be divided if the parties separate in the future. It can include how future assets should be divided and arrangements for children, contents and pets. 

What are the financial risks for a cohabiting couple?

Without a Cohabitation Agreement, a person’s finances can be negatively affected in a number of ways. For example, if either party is listed as the primary borrower on any loans or credit agreement, they will be liable for settling the debt, regardless of whether both parties had previously contributed to repayments.

Similarly, there is no legal right to maintenance payments after a breakdown of the relationship, even if one partner was financially dependent on the other.

What happens to a family home if an unmarried couple separates?

This would depend on how the family home was owned. If the property was jointly owned then it would be divided in accordance with how it had been registered at the Land Registry. 

If the property was owned in the sole name of one party, then they would retain this with no obligation to make any payment to the non-owner. In circumstances where the non-owner has made significant financial contributions there may be some claim, but this is in no way guaranteed – and that’s why a Cohabitation Agreement is so vital.

In the event that one partner moves out of the property, the remaining person could be left to unexpectedly cover all living expenses including utility bills, mortgage and groceries.

Is there protection for children of unmarried cohabiting couples?

Where there are young children, there is some protection under the Children Act 1989, however, this is based upon the child’s needs and requirements and would only be available until the child reached the age of 18. It would also require Court proceedings to be issued. 

Is an unmarried partner entitled to inheritance?

An unmarried couple has no inheritance rights. Unless a deceased partner’s will states otherwise, the remaining partner might not inherit anything. Other family members could make a claim on the deceased’s assets, leaving the surviving partner financially unstable.

Although a Cohabitation Agreement can outline how any property and valuables should be handled in the event of a partner’s death, it’s important to note that it would not automatically override a will. For this reason, it is advisable to draw up a will that reflects a couple’s agreement.

I am already cohabiting, is it too late to have a Cohabitation Agreement?

Whilst it is always a good idea to enter into a Cohabitation Agreement before you and your partner live together or at the early stages, there is nothing to prevent you from entering a Cohabitation Agreement at any stage in the relationship.

Once you have an Agreement, it is important to keep it updated to ensure it remains relevant and this could include matters such as if further property were purchased, a child is born, or one or both parties’ financial position changing significantly for example due to a pay rise, or inheritance.

What happens to a Cohabitation Agreement if we get married?

Some agreements would automatically terminate once a couple marries. Some couples choose instead to draft a Prenuptial Agreement before they marry, or a Postnuptial Agreement after the wedding – both set out the division of assets between a couple during a marriage, and in the event of a divorce. You can read more about Prenuptial and Postnuptial Agreements here.

Are Cohabitation Agreements only for romantic partners?

No! An agreement is an excellent idea for any two or more people that are planning to live together – whether friends, colleagues, or relatives. Also known as a Living together agreement. It can help to clearly define expectations and responsibilities around rent or mortgage contributions, property ownership, and division of any shared debt such as loans or credit cards.

It can also help to preempt any disputes by clarifying what would happen in the event of an additional housemate moving in, as well as the process for if and when one party chooses to move out, such as notice requirements and how any deposits would be split.

Is it complicated to prepare a Cohabitation Agreement?

No. It is important that all cohabiters have discussed arrangements so that the document correctly sets out what has been agreed, and it is usual that it includes details of the assets of the parties on an open basis within the Agreement. 

You will both – or all, have to sign the Agreement in the presence of an independent witness and it is extremely advisable that all parties have received separate, independent legal advice upon the meaning and implication of entering into the Agreement. This will assist greatly if any party seeks to depart from the terms of the Agreement in the future. 

Is a Cohabitation Agreement legally binding?

Cohabitation Agreements or Living Together Agreements are legal documents entered into with a view to recording evidence of intention and in certain circumstances may be enforced by the Court.  It is important that the Agreement is properly drafted and executed and that you have been open and honest about your finances. All parties involved should have obtained separate legal advice upon its terms and fully understand and freely agree to be bound by them. It is important that the terms of the Agreement are also fair and reasonable. 

In summary, although persuasive, ultimately the Court does have jurisdiction to unravel the Cohabitation Agreement if it is deemed by the Court to be manifestly unfair to one party and /or if inadequate provision is made for any child of a relationship.

Courts can depart from the terms of the Agreement in certain circumstances, however, it is an important document to have if you separate, as it clearly sets out what your intentions were at the time you were living together and this can be a very useful tool if one party seeks to change their position or allege no such Agreement existed. It is essential to obtain specialist legal advice to ensure the Cohabitation Agreement is tailored to meet your specific circumstances and needs.

Get in touch to speak with us about a Cohabitation Agreement or Living Together agreement.