Cohabitation Agreements

Cohabitation Agreements – How to protect your rights and assets

Please note that this article does not apply to married couples.

It is a truth (almost) universally acknowledged that the nature of personal relationships and living arrangements has evolved in recent years. More couples are choosing to live together without getting married, either as a precursor to marriage or as a long-term commitment in its own right. However, the legal rights and obligations of cohabiting couples differ from those of married couples, and this can have significant implications in the event of a breakup or if one partner passes away.

To address such unique challenges, cohabitation agreements have gained prominence as a legal tool to protect the rights and assets of individuals living together. In this article, the intricacies of cohabitation agreements are explored, including reasons why they are essential, and how a legally robust agreement can separate the interests of both Mr. Darcy and Miss. Bennett.

What is the legal status of cohabiting couples in England and Wales?

A key point to note is that cohabiting couples in England and Wales do not have the same legal rights as married couples. The common-law marriage myth, which suggests that couples who live together for an extended period are treated as if they were married, is merely a misconception. In reality, there is no such legal recognition of common-law marriage.

As a result, cohabiting couples may face a lack of legal protection and financial vulnerability in case the relationship ends. Therefore, cohabitation agreements play a pivotal role in establishing the relationship’s legal parameters and protecting both parties’ interests.

What is a ‘cohabitation agreement’ in practice?

A cohabitation agreement, also known as a “living together agreement” or “no-nuptial agreement,” is a legally binding document designed to outline the rights and responsibilities of individuals who choose to live together without getting married.

This agreement helps establish clear guidelines for various aspects of cohabitation, including property ownership, financial contributions, and the division of assets in case of a breakup.

What are the essential components of a cohabitation agreement?

There are a number of key ingredients which, when mixed together, create a suitable and well-structured cohabitation agreement. Such ingredients include clauses covering:

1. Property Ownership and Financial Contributions – One of the primary purposes of a cohabitation agreement is to determine how property is owned and how financial contributions are made during the relationship. This includes specifying who owns what, the division of rent or mortgage payments, and other shared expenses. The agreement can also address how financial assets, such as joint bank accounts, are managed.
2. Protecting Personal Assets – Cohabitation agreements can help protect personal assets, such as savings, investments, and property owned prior to cohabitation. Without such an agreement, these assets may become subject to division during a breakup.
3. Child Custody and Support – In cases where cohabiting couples have children, the agreement can also address issues related to child custody, visitation rights, and child support. This can provide clarity and security for both parents and the well-being of the child.
4. Preventing Disputes – Disputes over property and assets can be emotionally and financially draining. Cohabitation agreements are proactive tools to prevent disputes by clearly defining the rights and obligations of each party.

How do I produce a cohabitation agreement?

It is important to seek legal advice when creating a cohabitation agreement and we have a specialist team of solicitors who can assist. There are also a number of things to consider when producing a cohabitation agreement, namely the following:

a) Full Disclosure – Both partners must provide complete and accurate financial information. This includes disclosing all assets, debts, income, and liabilities. Full disclosure is essential to create a fair and enforceable agreement.

b) Clarity and Specificity – The agreement should be clear, specific, and unambiguous in its terms. It should cover all aspects of the relationship, including property ownership, financial contributions, and the division of assets upon separation.

c) Review and Revise – Cohabitation agreements should be periodically reviewed and updated, especially if there are significant changes in the relationship, such as the birth of children or the acquisition of new assets. Regular reviews ensure that the agreement remains relevant and effective.

How can a cohabitation agreement be enforced?

It is important to understand that cohabitation agreements are legally binding documents, provided they meet certain requirements:

i. Written Form – The agreement must be in writing to be enforceable. Verbal agreements are not legally valid in this context.

ii. Full Disclosure – Both parties must provide complete and honest financial disclosure.

iii. Independent Legal Advice – It is advisable for each party to seek independent legal advice before signing the agreement. This ensures that both parties fully understand the implications of the agreement.

iv. Fair and Realistic – The agreement must be fair and realistic at the time of signing. A court may not enforce an agreement that is deemed manifestly unfair or if it leaves one party in a significantly disadvantaged position.

v. Own Volition and Free Will – Both parties should enter into the agreement freely and voluntarily, without undue influence or coercion.

If these above criteria are met, the cohabitation agreement is more likely to be upheld by a court in the event of a dispute.

What is the difference between a cohabitation agreement and a prenuptial agreement?

Cohabitation agreements and prenuptial agreements must be distinguished, as they serve very different purposes:

• Cohabitation Agreements: These are designed for couples who are living together without getting married. They address the financial and legal aspects of cohabitation, with a focus on property, assets, and financial contributions.
• Prenuptial Agreements: These are intended for couples who are planning to get married. They outline the division of assets and property in case of future divorce. While some provisions may overlap with cohabitation agreements, they are distinct legal instruments tailored to the respective relationship statuses.

How does the court deal with cohabitation disputes if there is no cohabitation agreement in place?

In the absence of a cohabitation agreement, the courts in England and Wales may be called upon to settle disputes regarding property, assets, and finances. These cases are determined based on the principles of property and trust law rather than family law, and the outcome can be unpredictable, as with any litigation. Having a cohabitation agreement in place can provide a clear and legally sound framework for resolving any costly disputes which may arise. As the old adage goes, ‘an ounce of prevention is worth a pound of cure’.

Conclusion

Cohabitation agreements are essential for couples who choose to live together and do not intend to imminently marry. They provide a means to safeguard individual rights and assets, establish financial responsibilities, and ensure clarity in the event of a breakup. By seeking legal advice and adhering to the necessary criteria for enforceability, cohabitation agreements offer a proactive and comprehensive solution to the unique challenges faced by cohabiting couples.

In a legal landscape where “common-law marriage” holds no legal weight, cohabitation agreements empower individuals to take control of their future, providing peace of mind and security.

How we can help

If you require assistance with a cohabitation agreement, we would be more than happy to advise and guide you. As always, we will ensure that your matter is dealt with efficiently, diligently and effectively.

This article is intended for general information only, applies to the law at the time of publication, is not specific to the facts of your case and is not intended to be a replacement for legal advice. It is recommended that specific professional advice is sought before relying on any of the information given. © Jonathan Lea Limited 2023.