What is a cohabitation agreement?
If you live with your partner, or you are planning on living together (whether as a heterosexual or same sex couple), you can enter into a cohabitation agreement (sometimes called a living together agreement). This can set out the ownership of existing assets (including property), what your financial responsibilities will be towards each other and how savings and jointly owned assets will be distributed should you later split up.
More and more couples now choose to live together before they get married or enter into a civil partnership, or choose never to have their relationship legally recognised at all (by marriage or civil partnership). However, cohabiting does not entitle you to the same legal rights as marriage or civil partnership as it does not bind you together in the eyes of the law. For couples who are living together or have shared assets, this can lead to issues and uncertainties upon separation.
In reality, you have no express legal rights in a relationship if you are not married or in a civil partnership except in respect of jointly owned assets.
What can a cohabitation agreement cover?
The cohabitation agreement sets out who owns what and in what proportion in the relationship and covers elements such as the following:
- Ownership of property
- Deposit on your home
- What share of the mortgage or rent you will pay
- How household bills will be dealt with
- Bank accounts and money
- Life insurance
- Assets such as cars, furniture, other property, jewellery
- Payment of debts
- Next of kin rights
Pension access, property title deeds and wills should also be considered.
What should be included in a cohabitation agreement?
Although each cohabitation agreement is different and depends on your individual circumstances, there are a few key elements you should think about before seeking advice from a solicitor:
Property owned before moving in together—if one partner owns property, a cohabitation agreement can agree for this to be kept separate and prevent the other partner from having a claim over it. However, if the partner who does not own the property makes contributions to the mortgage or carries out renovation work, they could have a claim to the property in the future, so this is something to look out for.
Property bought while living together—if you buy a property while living with your partner and only one of you is named on the agreement, this will need to be addressed in the same way as above. If you are named as joint owners, you are both legally entitled to stay in the property if you should break up. You will need to think about what will happen to the jointly owned property upon separation – for example will it be sold?
Household bills—if you and your partner are not joint owners of your home, or one of you contributes more than the other, one of you could agree to contribute to the mortgage but acknowledge that this will not give that person any claim over the property.
Inheritance and wills—it’s important to remember that if you are not married or in a civil partnership, you will not automatically inherit each other’s estates if one of you dies. If you want to leave anything to your partner, you will need to draw up a will and keep it up to date.
Independent legal advice—when drawing up a cohabitation agreement, you will both need to seek independent legal advice to ensure that it’s binding and there is no doubt as to what you are both agreeing to. By doing this, the court is much more likely to take notice of your agreement and put it into effect if you were to break up. There should also be disclosure of your financial situations. The document should be executed as a deed.
Why should I have a cohabitation agreement?
Many couples are under the assumption that, if they are living together but unmarried or not in a civil partnership, then ‘common law marriage’ protects them in the same way as married couples. However, no such law exists. Couples who live together do not have the same legal rights as married couples or those in a civil partnership so this assumption is a myth.
A cohabitation agreement can provide peace of mind in your relationship. By coming to an agreement before or whilst you are living together, you will:
- have a clear understanding of what your financial commitments are
- avoid misunderstandings regarding your rights and responsibilities as you continue to live together, in particular with regards to ownership of property
- avoid difficulties and disagreements if you split up
- have clear evidence of your intentions should you have to go to court
Who does it protect?
It can protect either or both of you in the event of a relationship breakdown. It can operate in a similar way to a prenuptial agreement by making it clear how the pre-owned assets of one partner are to be shared with the other if you should break up in the future or if the property is owned in the sole name of one party and another party moves in. It can make it clear for both partners that contributions towards utility bills by one partner may not entitle them to a share of the property itself if you should break up.
It can also protect the economically weaker partner. For example, if you are a parent who has given up your job to care for the children, and the family home is owned in your partner’s sole name, your contributions in looking after the home and raising the children would be recognised as an equal contribution if you were married or in a civil partnership. If you are unmarried or not in a civil partnership, you could be left with nothing, even if your partner had financially supported you for several years.
As cohabitees, if you own property jointly, the starting point is that it is divided 50/50 on separation as joint tenants, even when one partner contributed much more to its purchase, unless you make a written agreement to declare different shares, (such as a tenancy in common). There can be exceptions to this and you should take legal advice.
To make sure that your joint intentions on setting up home together are enforceable and will provide the protection you each seek, a cohabitation agreement is vital.
What rights do I have with a cohabitation agreement?
As you do not have the same rights as a married couple or a couple in a civil partnership when cohabiting, a legal document such as a cohabitation agreement (as well as a will) can be useful if you separate – the hope is that you have dealt with the issues from the outset and it will therefore hopefully avoid expensive litigation and provide an accurate reflection as to the intentions of both parties when living together.
A cohabitation agreement can be reviewed and amended periodically, by consent.
Is a cohabitation agreement legally binding?
A cohabitation agreement is a legal document, enforceable by the court if it is properly executed and providing you have both been honest about your finances and each obtained separate legal advice upon its terms.
How do I make a cohabitation agreement?
Our highly experienced family lawyers are experts in this field and have helped many couples setting up home, or already living together, to draw up agreements that are tailored to their own individual needs.
Does a cohabitation agreement have to be signed before completion?
In order for your cohabitation agreement to be valid, the following conditions must apply:
- You should both enter into the agreement freely and voluntarily
- The agreement should be set out in the form of a deed
- Each of you must sign the document
- You must keep the agreement up to date with any major life changes
How much does a cohabitation agreement cost?
This depends on how complex your living arrangements are going to be and how much detail you want to include in your cohabitation agreement. We will advise the cost once we know the nature and extent of your intended provisions however, as a guide, the cost will be roughly between £650 – £2000 plus VAT, depending on the complexity of the agreement.
One thing’s for sure, it will be a lot cheaper than battling out later disputes in court without one!
What does a cohabitation agreement look like?
A cohabitation agreement sets out each partner’s rights in regards to property should your relationship break down in the future. This means that you are both clear about who owns your assets and how your bills will be paid.
Can I legally draw up my own cohabitation agreement?
Whilst you can access templates online, the agreement should be specific to your case and tailor made – a template may miss something out.
For the agreement to be upheld in court, it’s important that you both seek independent legal advice to make sure neither of you are in any doubt as to what the agreement covers and ensure there are no mistakes in the document.
Should you decide to separate after living together for an extended period of time, cohabitation agreements can save you a huge amount of time and money. Without a cohabitation agreement, if there is any dispute around who owns an asset or their share in it, it could result in court proceedings which are both lengthy and costly. In addition, if you are unsuccessful in the dispute, you may be required to pay for all the legal costs of the winning party.
Can a cohabitation agreement be modified after it is created?
Yes, a cohabitation agreement can be modified once it’s been created. It is advised that you keep it updated as your relationship changes or if anything significant happens in your relationship. Key reasons may include the following:
- The birth of children
- One of you becomes seriously ill
- One of you becomes disabled
- One of you is made redundant
- Your financial circumstances change significantly
- One of you receives a large inheritance
- You plan on getting married or entering into a civil partnership
Do cohabiting couples have the same rights as married people or those in a civil partnership?
As the law in the UK currently stands, the only way to achieve the legal rights of a married couple is to get married or enter into a civil partnership. This is not changed even if you have lived together for a long period of time, have children or have bought a house together. Without marriage or a civil partnership, you have no claim for maintenance for yourself (you do for children), no claim against any assets in the other party’s sole name and no entitlement to property.
If you cohabit rather than getting married or entering into a civil partnership and do not have a cohabitation agreement, you have:
- no automatic rights to your partner’s property in the event of their death
- no automatic entitlement to inherit their estate, even if you have children
- no tax reliefs or exemptions that spouses and civil partners enjoy, including pensions
What are the differences between cohabitation and marriage or civil partnership?
Outside a marriage or civil partnership, the law does not recognise a relationship in any meaningful way. This means that if the relationship breaks down, there is very little protection for the weaker partner.
If married couples divorce or there is a dissolution of a civil partnership, both partners have a legal right to maintenance and their share of assets. If you are cohabiting, you do not have any of these rights, regardless of how long you have been together and whether you have children.
Currently, the only way for cohabiting couples to gain legal protection in the event of a break-up is to be married, in a civil partnership or signatories of a cohabitation agreement.
Under UK law, cohabiting couples do not have the same legal rights as married couples or those in a civil partnership. A cohabitation agreement can grant cohabiting couples legal protection, allowing them to legally define and protect their share of the property should they decide to end the relationship.
Marriage and civil partnership offer important rights that are recognised under UK law, but a cohabitation agreement is something drawn up by a solicitor to suit your specific requirements.
What is the difference between a prenuptial (pre-civil partnership) agreement and a cohabitation agreement?
If you and your partner are living together with no intention of getting married or entering into a civil partnership in the near future, this is the time when you might typically enter into a cohabitation agreement.
However, if you are planning to do either soon or you are engaged or actively planning your wedding or civil partnership, you would enter into a prenuptial or pre-civil partnership (or pre-registration agreement) agreement – note there are specific timeframes in which a prenuptial agreement can be made and therefore you should act sooner rather than later. Both agreements are available to unmarried couples or those not in a civil partnership but there are a few key differences.
A cohabitation agreement tends to be more flexible and decides on what happens to your assets if the relationship breaks down, including who owns what and in what proportion, making it clear how all property should be dealt with.
If you enter into a cohabitation agreement you should seek legal advice before marriage or civil partnership.
A prenuptial, or pre-civil partnership agreement, is entered into before a marriage or civil partnership takes place and you must be planning it and know when it is going to take place. This agreement decides on what will happen to your finances if the marriage was to break down. It is used when you want something different to what you would be entitled to by law once you are married or civil partners; for example, to protect assets owned prior to the marriage.
What is the difference between a cohabitation agreement and a declaration of trust?
A declaration of trust records the way in which the proportions of a property are held and sets out how any proceeds of sale would be divided if the property is sold in the future. It will take into account your initial contributions to the property, who will pay the mortgage and who an increase in value will be attributable to after making home improvements (a new kitchen or windows) or DIY (a loft conversion or building an extension).
Cohabitation agreements are more comprehensive and dictate what happens to the property if the relationship breaks down. However, it also deals with day-to-day matters such as the responsibility for household outgoings and how costs of repairs or improvements will be dealt with.
How does a cohabitation agreement affect your state pension?
Traditionally, pensions were designed to provide for a wife if the husband died. State pension laws have now changed and the details of who the pension provider should pay out to in the event of a partner’s death now differ on a case-by-case basis. As a result, it’s important for couples who are cohabiting to explicitly state who they would like their pension to be paid out to in the event of their death.
What is the legal position if my partner and I live in a property that one of us owns?
If one of you owns a property that you are both living in, a cohabitation agreement will outline your rights to the property and make it much easier to understand exactly what you’re entitled to in the event of a break-up. It will mostly cover how you will share the rent/mortgage and bills between you and how bank accounts, money, property and assets are divided if you should separate.
Without a cohabitation agreement, if you own the property, your partner may be able to claim ‘beneficial interest’ in your property and, if successful, your partner may then have the right to:
- live in the property
- a share of the income if the property is rented out
- a share of the profit of the sale if the property is sold
Does a cohabitation agreement overwrite tenants in common?
As tenants in common, you each own a specific share of the property. This will usually be 50/50. However, you can specify how much of the property each of you owns, such as 75/25. On death, the share of the property owned by the deceased does not go to the other property owner or owners, it goes to whoever it was left to according to the will.
However, you can also make it absolutely clear in your cohabitation agreement who owns what. It will also cover who is responsible for what, including bills, living expenses and maintenance, and who owns the furniture.
If a party sought enforcement of a cohabitation agreement, would this be done in a family court or a regular civil court?
Should your cohabitation agreement need to be enforced, the family courts will look at it very closely when deciding how assets should be divided when couples split up.
What happens to a cohabitation agreement if one of us dies?
If you’re worried about what will happen if you or your partner dies while you are cohabiting, it’s important that you outline your wishes in your cohabitation agreement and also seek advice about a will.
Making a will
If you are intending to cohabit as an unmarried couple or a couple not in a civil partnership, it is essential that you each make a will if you want your partner to inherit your estate if you die.
Contact our family law experts now to discuss your individual needs or to make an appointment for a confidential meeting.