What is a cohabitation agreement?
A cohabitation agreement is a legal document that outlines arrangements between two people who live together as a couple but are not married or in a civil partnership. A cohabitation agreement is sometimes referred to as “cohabitation contract” or “living together agreement”. The document sets out the rights and responsibilities of both parties relating to the property where they live (or will live), financial arrangements while living together, and what will happen in the event of separation.
A cohabitation agreement removes the legal uncertainty experienced by cohabiting couples. Unlike married couples, cohabiting couples do not have an automatic right to an equal share of each other’s property and assets. This means that in the event of separation, cohabiting couples may find themselves without any claim on the property in which they live, potentially leaving them homeless. By putting in place a well-drafted cohabitation contract, you can set out which property is jointly owned, which is separately owned, and what should happen to that property if you separate. Ultimately, a cohabitation agreement helps you avoid the potential cost of litigation if separated cohabitees disagree over beneficial interests in any property and assets shared while living together.
What can you include in a cohabitation agreement?
A cohabitation agreement can include a wide range of clauses which clearly set out the agreement between cohabiting couples. Some of the areas covered by this living together agreement include (this list is not exhaustive):
- Disclosure
- Ownership of property
- Share of household expenses while cohabiting, and
- Financial support
Disclosure
A cohabitation agreement should set out the income, assets, liabilities and capital of both parties. This disclosure can be documented in a “Form E financial statement” and attached to the legal document.
Ownership of property
The cohabitation agreement should set out all jointly (i.e. co-owned) and separately owned property. When it comes to joint property, it is important to describe how these items should be handled in the event of separation. If a cohabiting couple live together in a property that is in both names, both partners will be legally entitled to live in the property.
Separate property refers to assets that will remain in the ownership of a named party if cohabitation ends, even if it has been used by both parties while cohabiting. With a living together agreement, when one person owns a house, you can make it clear what should happen to that property following separation or death.
Share of household expenses while cohabiting
A cohabitation contract normally describes how household expenses will be paid and by whom. This includes all household costs, such as:
- Portion of rent/mortgage to pay
- Rent
- Utility bills
- Council tax
- Buildings and contents insurance
- Repairs
- Renovations and home improvements, and
- Food bills
Financial support
Your cohabitation agreement may stipulate any financial support for children if cohabitation ends. In addition, they normally outline any arrangements for financial support between the parties during and after living together. While this is not legally required, some parties may wish to provide financial support to their partner. For example, one party may pay the other monthly payments during or after cohabitation for a set amount of time or indefinitely.
Cohabitation contracts can also be used to set out financial provisions by one party for a surviving cohabitee on their death. This may be done by making a nomination of their pension or death in service benefits (or both). However, it is important to bear in mind, that including provisions in this document in the event of the death of one or both parties is not the same as inheritance planning and drafting a will. Separate legal arrangements should always be made for these purposes.
How to get a cohabitation agreement
If you and your partner wish to enter into a cohabitation agreement, it is advisable to carry out the following steps:
- List all of your joint and separate assets, including property, investments, pensions, and savings.
- Decide between yourselves how you would like your joint and separate assets to be handled while cohabiting, and if you separate.
- Decide on how you will share your living costs.
- Decide on any financial provision by one party to the other, including how much and how often payments will be made while living together and in the event of separation.
- Engage a family law solicitor who will help you draft living together agreement that fully reflects your agreement.
- Have your cohabitation agreement signed by two witnesses.
Is a cohabitation agreement legally binding?
A cohabitation agreement are legally binding but only if prepared correctly. Being legally binding means that they are more likely to be enforced by the courts in the event of a disagreement between cohabiting or previously cohabiting individuals. For a cohabitation agreement to be legally valid, it must be:
- Signed as a deed – cohabitation contracts are typically recorded in writing and executed as a deed rather than as a simple contract. Having an UK living together agreement as a deed means that it will not fail due to a “lack of consideration”.
- Accurate – i.e. contain no mistakes or untrue statements.
- Drafted, signed and witnessed properly.
- Entered into freely – i.e. without duress or undue influence.
How much does a cohabitation agreement cost?
A cohabitation agreement may cost anywhere between £250 and £5,000 in legal fees. The exact cost will depend on the complexity of your case. It is important to bear in mind that while there is cost associated with drafting and executing a cohabitation contract, this may be much less than any potential litigation costs if you disagree with your partner or ex-partner regarding your property and assets.
How long does a cohabitation agreement last?
Depending on the terms of your cohabitation agreement, it may be terminated in the event of the death of either party, marriage or civil partnership, or either party serving a notice on the other. What matters is that you keep your living together agreement up to date. Changes may be necessary, for example, if you get married, purchase a new property, or if you have a child.
Can you enforce a cohabitation agreement?
If one party stops abiding by the terms of a cohabitation agreement, the other person can seek legal recourse through the courts to enforce the agreement. For example, if one party stops making monthly payments to the other as agreed, the court may enforce the agreement and require the payments to be made. This is why it is so important for both parties to a living together agreement to understand their rights and obligations and what will happen if they cease to respect the agreement reached.