Unmarried Couples: What is a Cohabitation Agreement?

At Maguire Family Law we are often contacted by parties who are about to start living together, or are already living together, but are not married. They often come to us as they want to know how they can both protect themselves when they are going to be living in a property together, and one of them owns the family home in their sole name, or they own it together but want to set out what would happen in the event that they were to separate in the future. In this situation the best thing that they can do is to enter into what is known as a Cohabitation Agreement with each other.

A Cohabitation Agreement can be entered into at any time, whether you are about to start living together or if you have been doing so for many years. The law governing a cohabiting relationship is much different to that governing a married couple. Furthermore, there is no such principle of ‘common law marriage’ and living with someone for a certain period of time does not mean one is automatically entitled to some financial support or to an interest in property in the event the relationship was to break down. There have been proposals to change the law for unmarried couples but, at present, this has not happened.

It is common for those in a relationship who chose to enter into such agreements, and who later separate, to avoid future arguments relating to financial matters. This is because the process of entering into a Cohabitation agreement involves them both, from the outset, talking about financial matters with each other and thinking about how they will live together and the financial arrangements that will be in place

 A cohabitation agreement is a written, signed document and would ordinarily be signed as a deed before a witness or a parties’ legal representative. It will generally deal with three principle areas:

• Who owns (and owes) what at the time of the agreement, and in what proportions;

• What financial arrangements you have decided to make while you are living together; and

• How property, assets and income should be treated if the relationship was to break down.

Where the agreement is properly drafted, the terms are reasonable, there has been full and frank financial disclosure between you both and each of you has had separate, independent legal advice on its effect, a court is more likely to uphold the agreement in the event of a dispute. However, it is important to note that a Cohabitation Agreement is not legally binding. It is essentially a contract and relies on the fundamental contractual principles of offer, acceptance, consideration and intention to create legal relations.

Whilst not legally binding, a Cohabitation Agreement is likely to be upheld (if challenged) providing it is signed with both parties taking independent legal advice, following the exchange of financial disclosure (this can be in schedule format), providing the terms of the agreement are not significantly unjust and providing neither party has been pressured into signing.

Certain information is ordinarily included in a cohabitation agreement, such as:

• full names and dates of birth, nationality, domicile and residency status of the parties;

• the nature of the financial disclosure that has been exchanged;

• any matters of particular significance that are not obvious from the agreement and attachments, for example, whether either party is a beneficiary under a particular trust or that the agreement is made in contemplation of an inheritance or other significant future alteration in either of the parties’ assets;

• that the agreement shall remain confidential;

• that the parties have each taken legal advice; and

• the parties may wish to set out what provision they will make for each other in their respective wills.

In terms of the specific content which can be included in the Cohabitation Agreement, there is some flexibility with how much or how little is included. For example, the following matters can be dealt with in these types of agreements:

• The Family Home: the agreement can record how the home is owned, and if it is not in sole names, whether one party is to obtain any beneficial interest in it. It can set out who is to pay the mortgage, and whether life insurance is to be taken out in relation to this.

• Money and Bills: the agreement can record whether the parties will have a joint bank account and what bills will be paid from this, as well as the respective contributions each party will make into the account each month.

• Pensions: the agreement can record whether or not the parties wish to nominate each other for any death-in-service benefits they may have under their respective pensions.

• Personal Possessions: the agreement can set out who owns what property, and how future possessions that are acquired will be owned, whether by the person who purchases them or jointly between the parties. The agreement can also set out how any personal possessions will be divided in the event the parties separate in the future.

If you are thinking about living together with your partner and you are not married, or you are already living with them and think you could benefit from having a Cohabitation Agreement, please contact us today. We are experts in the drafting and negotiating of these types of agreements and can assist you in preparing a bespoke agreement to meet whatever your needs are.