What happens when cohabitees separate?
Cohabiting couples do not enjoy the same legal protection as married couples if they separate. Even unmarried couples who have lived together for many years do not have the same legal protection (it is important to note there is no such thing as ‘common law marriage’ in English law).
This means when cohabiting couples separate they can find themselves in a complicated legal ‘tug-of-war’ over property and finances, and even the children and pets. They cannot apply for financial remedies such as maintenance or property rights in the same way that a spouse can on divorce.
If you move into your partner’s home, they will still legally own the contents that belong to them in the event of a split. Even if you contribute to household bills, and extensions or renovations, you may not have any legal entitlement to a share in the property, and in circumstances where you believe you have a right to a share of property, the costs of court proceedings may be prohibitive.
For these reasons, cohabitees may wish to consider drawing up a cohabitation agreement. If this is done properly and the agreement is fair and reasonable, a cohabitation agreement may be legally binding on the parties.
Is it important to have a cohabitation agreement?
If you want a committed relationship but without a legal marriage (or civil partnership) a cohabitation agreement is wise. It can cover how financial and other matters are dealt with now and, importantly, how they are to be dealt with should you separate. A well-crafted cohabitation agreement will protect your interests and give clarity on what will happens to the assets if you split up.
Whether a cohabitation agreement will be legally binding may depend on how formal you have made it. If you have carefully negotiated the terms, both of you have taken independent legal advice and it has been formally drawn up by solicitors as a legal contract, it should be legally binding. If it is drawn up informally or, for instance, there was a lack of transparency over assets and income, no independent legal advice was taken, or there was duress or undue pressure on one of the parties, it will not stand up in court.
That said, if a dispute reached the court the contents of a cohabitation agreement could be taken into account if it is fair to do so.
What should a cohabitation agreement contain?
A cohabitation agreement will typically set out the obligations and rights of both parties in relation to the home and any other property, the house contents, bank accounts and other assets. It could formalise an agreement as to what proportion the parties will pay towards rent or mortgage, food, utilities and other bills, and who is responsible for certain matters during the relationship.
Importantly, it should deal with how financial and other matters are to be resolved if the parties separate. You should talk together openly about who owns what and how these assets should be divided in the event of a split. If you have children, discuss child maintenance or support, education and potential residence and contact issues, and what would work in the children’s best interests.
Further issues you may need to consider include:
- Obtaining a market valuation of your house and any other property either of you own
- Who owns the property including who paid what for it, and how much remains on any mortgage
- Who is responsible for home improvements and repairs
- The consequences or implications if the home is sold
- Your respective earnings and liabilities, pensions, savings, etc
- Any inheritance expected and how you may want to divide it, if at all
Can the cohabitation agreement be altered?
Yes, if your circumstances change it would be worthwhile to review the agreement, and either vary it or make a new one if necessary. Changes in circumstances which could prompt you to revisit your agreement include where:
- one of you becomes seriously ill or disabled
- one of you loses their job
- one of you has a significant pay rise
- one of you receives a significant inheritance or lottery win
- the birth of a child
What happens next?
Once the important matters have been agreed, you should each take independent legal advice and have the agreement formally drawn up by specialist solicitors. When you have both taken legal advice on the agreed terms and you are happy to proceed, the agreement can then be signed and witnessed. It will then be legally binding on you both.
What happens if we marry?
If you subsequently marry, the cohabitation agreement may be recognised by the courts but it would depend on a number of factors. These would include the wording of the agreement, and whether it would be fair and reasonable to give weight to it in view of a spouse’s legal rights on divorce.
Also, a cohabitation agreement will not automatically become a prenuptial agreement on marriage, so if you plan to marry you can consider reviewing the cohabitation agreement with a view to making a prenuptial agreement. Again, both of you will need to take independent legal advice.