If you are living with your partner, or planning to do so, but you don’t think you need a cohabitation agreement, think again. Read on for an explanation about why you need a cohabitation agreement.
At its simplest, if you sign a cohabitation agreement with your partner and then separate, the fact that you signed the agreement can save you thousands in legal fees and make what could have been a very acrimonious split relatively amicable.
Who needs a cohabitation agreement?
People think they only need a cohabitation agreement if they are buying a house jointly with a partner but that isn’t correct.
You need a cohabitation agreement if:
- You own your own home and your partner is moving in with you.
- You are buying a house in your name but your partner is intending to live with you.
- You are jointly buying a house with your partner, either as joint tenants or as tenants in common. A cohabitation agreement is particularly important if parents are helping you with the deposit or you’re not paying the same amount towards the deposit or one of you will pay more towards the mortgage.
- You jointly own your house, or the property is owned in one partner’s name, and one partner is paying for renovations or an extension.
Unmarried relationships and property claims
Many people think:
- A partner has no legal claims unless you are married or
- A partner doesn’t have any legal rights or claims if they are not a legal owner of the property and named on the title deeds or
- A partner has automatic legal rights if they are a common law husband or wife.
All of those assumptions are not correct. The law on unmarried relationships and property rights is very complicated but matters can be simplified by signing a cohabitation agreement.
What happens if you don’t have a cohabitation agreement and separate?
If you don’t have a cohabitation agreement and you later separate from your partner then property claims can potentially be made if:
- The house is owned in joint names.
- The house is owned in one partner’s name but promises were made that their partner had an interest in the property. Promises can be verbal or in writing.
- The house is in one person’s name but their partner has made financial contributions to the property on the understanding that they had an equitable interest in the house. Financial contributions can include paying the mortgage or funding property renovations or physically doing work to the property.
If you split up and there’s no cohabitation agreement, you will have to try and reach an agreement about what should happen to the property and whether you and your partner have a financial interest in the property and, if so, how the interests should be quantified. For example, if one of you paid all the deposit money but you both contributed towards the mortgage.
If you can’t reach an agreement over who owns the property, or how the equity should be split, court proceedings can be started. The court will want to see historical paperwork to evidence who paid for work to the property or evidence of any verbal agreement over equitable property interests.
Disputes over property ownership can take a long time to resolve and can cost a lot in legal fees. Importantly, if you leave the decision to a family law judge, there is no guaranteed outcome; just a lot of expense, delay and uncertainty for you.
What happens if you have a cohabitation agreement and separate?
If you have a cohabitation agreement then, in the vast majority of situations, what happens to the property will be governed by what is said in the cohabitation agreement. That means if you split up and there is a cohabitation agreement in place, the separation is likely to be less acrimonious as you both know where you stand legally. Importantly, you are likely to be able to separate without having to spend a large amount on legal fees to fund expensive court litigation.
How is that possible? A cohabitation agreement solicitor will ask you questions about your planned property purchase or your plans to move in with your partner and help you with a cohabitation agreement that can cover matters such as:
- What happens if one partner paid the deposit – the agreement could say the partner gets the deposit back. An alternative solution is the partner who paid the deposit gets the deposit money back expressed as a percentage of the value of the house at the date of sale or transfer. The agreement can say the remaining net equity in the property should be split in accordance with the terms of the cohabitation agreement.
- What happens if one partner owns the house – the agreement could say both partners agree the non-owning partner will only be able to claim a financial or beneficial interest in the property if there is a formal written agreement. This avoids the risk of one person saying that a promise was made verbally that they would get a share of the property.
- What happens if one partner takes over paying the mortgage or funds an extension – a cohabitation agreement can look at various scenarios including what happens if one partner loses their job and can’t pay their share of the mortgage or one partner receives an inheritance and uses it to extend the property.
How easy is it to sign a cohabitation agreement?
It is very easy to sign a cohabitation agreement. The important bit is speaking to a specialist cohabitation agreement solicitor so:
- You understand the potential property claims if you don’t sign a cohabitation agreement.
- You have an awareness of what can be included in a cohabitation agreement so your agreement is drawn up to reflect your circumstances and wishes.
- You work with your cohabitation agreement solicitor on an agreement that meets your needs and gives you peace of mind.
Can you sign a cohabitation agreement after you have started living together?
You can sign a cohabitation agreement after you have begun living with your partner. It is very sensible to sign a cohabitation agreement if your circumstances change after your cohabitation. For example, you inherit money or your parents want to gift you money to pay for a new kitchen or to pay off the mortgage.
Questions
The likelihood is that you will have questions about your cohabitation agreement and how it fits in with your ownership of your property and your relationship. It is best to ask those questions so you know rights and options and how a cohabitation agreement can not only protect you financially but give you peace of mind. As a specialist cohabitation agreement and family law solicitor, I can provide you with:
- Affordable cohabitation agreement legal advice at a fixed fee.
- A cohabitation agreement that meets your personal and financial circumstances and is bespoke to you.
Cohabitation agreements work in the same way as a prenuptial or postnuptial agreement, but tailored for those who are not getting married.