How a cohabitation agreement strengthens your legal rights

Article reference: UK-IA-FAM01
| 5 min read

The decision to move in and live together is a significant one. Not only can it be a large commitment to a relationship; it can change your finances, ownership and use of your possessions, and children arrangements.

Although there are big lifestyle changes to be made when you start living together, it might be more important to consider what would happen if you were to split up subsequently.

How is cohabiting different from marriage and civil partnership?

If you are married or in a civil partnership and the relationship ends then you have far stronger legal rights than if you were not married. For example, you will be entitled to a fair share of your joint assets.

In UK family law, the concept of a common-law marriage (where couples living together acquire rights over time) does not exist. When a non-married relationship ends, the law provides no more protection than if you were housemates at college or university.

So as two people living together unmarried, particularly if one of you becomes dependent financially on the other in some way, you are in a much more delicate situation than a married couple would be in.

Because of this, unmarried couples should always consider whether, if the relationship breaks up, how likely it would be that you will both continue to be kind, reasonable and sensible to each other, and how your jointly owned property and possessions would be split.

One way of protecting both of you better is to make a cohabitation agreement (also known as a living together agreement).

What is a cohabitation agreement?

This document sets out living arrangements during your relationship and how money, property and other possessions should be divided if you break up.

A cohabitation agreement is a very practical, legally binding document that can cover as much or as little as you like.

What your cohabitation agreement might cover

Ownership of the property you live in, right to stay living there, and repayment of any mortgage

If one of you owns the home you live in his or her sole name, the other has no automatic right to stay if the relationship breaks up.

That is the case even if the non-owner pays towards the mortgage or running costs. The only exception to this rule is if you have agreed otherwise in either a cohabitation agreement or in a licence agreement that gives you the legal right to occupy the property.

If you are contributing to the mortgage and want your payments to be recognised as such, rather than as rent, then the starting point is to agree who owns what share of the property and whether the shares change over time.

Then you need to consider what might happen in the future and plan for what you would like to happen.

For example:

  • who should live in the property if one of you looks after children and does not work
  • what should happen if one of you becomes severely injured or even dies
  • what happens if your employment circumstances change and one of you cannot afford your contribution to the mortgage repayments
  • how a deposit that you made jointly will be divided if you sell the property or if one of you buys the other out

If ownership changes, you may need to tell the Land Registry, or use a tenants in common agreement to define the ownership split.

Property ownership is best as 'tenants in common'

Even if you do make a cohabitation agreement, if you own your home together (or if you are planning to buy together before you get married or enter into a civil partnership) it is a good idea to make sure that the property is owned as 'tenants in common'. Your solicitor or conveyancer should ask you when you buy how you want to hold it. The main advantage of holding it as tenants in common is that you have the flexibility to leave it how you like in your Will, whether your partner or someone else.

Division of money, possessions, and other assets

Some possessions are easy to divide.

You can agree that any personal possessions you brought into the relationship (such as inherited furniture) are yours if you no longer live together.

You can split the money in joint bank accounts.

More difficult is to decide how large, less easily divided assets should be split. Assets like these might include life insurance policies or pensions, where one of you has contributed salary to savings while the other has used income to meet day to day requirements.

One solution, which Net Lawman's living together agreement provides, is a proposal for a graduated capital payment depending on the comparative wealth of both parties. You can decide exactly how it works under our framework.

Monthly maintenance

Even though you are not married, you can agree for one of you to pay the other monthly maintenance. There is great flexibility on the arrangement you can choose - much greater than if you are married or civil partners.

It is a good idea to differentiate between payments that are intended to contribute to household bills that one party pays and payments for lifestyle living expenses.

Bear in mind that maintenance payments tie you together after you split. It might be preferable for you both if one partner gives the other a lump sum, or a graduated capital sum rather than an on-going payment. Certainly, this can be safer if the circumstances of the person paying maintenance change.

Children arrangements

Even if you don't have children now, you might in the future, so your agreement should consider them.

If the parents of a child are unmarried, then only the mother has any automatic rights in respect of the child. She alone will have parental responsibility for the child. However, since 1 December 2003 (s111 of the Adoption & Children Act 2002) it is now easier for an unmarried father to acquire similar rights. All he needs to do is to register the birth of the child with the mother.

An unmarried father can also acquire joint parental responsibility or even sole parental responsibility, by applying to the court for an order. He can apply for joint parental responsibility, a residence order (that the child lives with him rather than his or her mother), or a contact order (that he should be entitled to see his child on a regular, specified basis).

With same-sex civil partnerships, rights can be less clear.

A more immediate problem might arise if the parties fall out, and separate and fight over the children immediately. If it is clear that the children are suffering or may suffer, it is likely that the local authority will take them into care. A well-constructed agreement, followed by the parties when the bad times come, will enable the children to continue their lives as near normal as possible, as well as the parents their own lives.

Death

However remote the chance of death of one of you may seem, you should consider and account for it. After all, you are entering into a cohabitation agreement largely as an insurance policy, so you may as well deal with the risks thoroughly.

There is an additional potential problem with death: either party may change a will at any time and if there is none, the normal rules of intestacy apply. A 'life partner' is entitled to nothing by law, unlike married couples or civil partners where the surviving spouse receives the whole estate.

If you both die within a short time of each other, your next of kin may find it difficult to determine what each of you owned. It may be necessary for your executors to go to court to resolve arguments. A cohabitation agreement helps avoid this.

If you have taken out life insurance or you are entitled to death-in-service insurance as part of your employment benefits package, you can confirm in the cohabitation agreement that you would like your partner to receive some of the cash sum paid on your death.

We recommend that cohabiting couples also each make a will. We provide a number of templates, one of which should be suitable. Simpler ones are even free.

Businesses and employment

It often happens that at some stage of the relationship, partners in personal life decide to become partners in a business.

While it is impossible to know what the future holds, let alone plan for it, the long version of the Net Lawman cohabitation agreement provides a framework into which you can plan for possibilities.

You can keep business arrangements at arm's length by using other business structure documents, such as a partnership agreement or a shareholders agreement. You can also separate business finance from personal finance by documenting loans and investments.

Is a cohabitation agreement legally binding?

In England and Wales, and in Scotland, a cohabitation agreement forms a legally binding contract provided certain conditions are met.

The most important of these conditions in respect of all family law documents is that the parties entered into the agreement of their own free will and in the knowledge of what they agree to.

When cohabitation agreements are challenged in court, it is often on the basis that one person was coerced or didn't understand the implications of the contract.

One 'insurance policy' against such a claim is for both partners to obtain independent legal advice, preferably from separate firms of solicitors both specialising in family law. If the relationship does end, then neither can say that they didn't understand the implications.

However, in many cases, obtaining separate counsel is expensive. Particularly for younger cohabiting couples, where the risks of breaking up are lower because there are no children and no valuable assets to protect, the benefit of taking legal advice is reduced.

Since a cohabitation agreement can be entered into at any time in a relationship and later remade, younger couples may want to make one that covers a simpler relationship now, and remake one taking advice when life includes kids, mortgages, pensions and business assets.

There are other ways to record property ownership. You can record fixed ownership percentages at the Land Registry and flexible ownership percentages in a declaration of trust or tenants in common agreement. You can also make a Will at any time.

Is a cohabitation agreement cost-effective?

Drawing up a cohabitation agreement may incur a small cost now, but can save you time, money and worry if you separate whilst living together.

Having an agreement in place isn't a guarantee against disagreements over how assets should be divided if there is a relationship break up. However, it does act as a record of what you agreed, which makes disputes less likely and resolving them faster.

Resolving disputes may not necessarily require you to go to court. Mediation may be possible. But either route is likely to be more expensive than the cost of drawing up a cohabitation agreement.

Documents

Net Lawman sells a cohabitation agreement that considers all these points here. It should act as an aide-memoire during planning, as well as the basis of a written legal agreement when you are both ready to commit.

Even if you later get married or enter into a civil partnership, using a cohabitation agreement now while you are not gives you both a little more comfort as to your legal rights should you separate.

Please note that the information provided on this page:

  • Does not provide a complete or authoritative statement of the law;
  • Does not constitute legal advice by Net Lawman;
  • Does not create a contractual relationship;
  • Does not form part of any other advice, whether paid or free.
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