When a relationship breaks down, often the most difficult issue is the occupation and ownership of the home. Some conflict and animosity can be removed if there is an agreement already in place confirming how assets are to be divided. At Barnes Clark Family Law, we can assist in drawing up any agreement.
What is a cohabitation agreement?
A cohabitation agreement is a document setting out arrangements between two or more people who have agreed to live together, as a couple or otherwise. It records each party's rights and responsibilities in relation to the property and the financial arrangements between them both.
A cohabitation agreement can also be used to record ownership of personal property (including items such as cars, furniture or art) which may be used or enjoyed by both cohabitees when they live together, but are to be retained by the owner if cohabitation ends.
Cohabitation agreements are a useful tool for unmarried couples, to outline from the beginning what will happen financially if parties separate, especially as unmarried couples do not have the same rights as those who are married. Please see our page on unmarried couples and separation for further guidance.
What are the advantages of entering into a cohabitation agreement?
- Avoiding the cost and uncertainty of litigation
Cohabitation agreements are a helpful way of recording a cohabiting couple's intentions about their real and personal property when they decide to live together. Former cohabitees can often spend vast sums of money on litigation to determine their respective shares in property which they either co-own or which is owned solely by one of them but which the non-owning party may have made financial or domestic contributions towards.
A well drafted cohabitation agreement records each party's legal and beneficial interest in the property. This reduces the possibility of a dispute about ownership if cohabitation ends. The agreement can include clauses that regulate the following:
- Occupation of the property and payment of household and living expenses pending sale.
- How and by whom the property is to be valued.
- How the costs of sale are to be paid and by whom.
- How the proceeds of sale are to be divided.
Having a cohabitation agreement in place and discussing each person's rights and obligations in relation to the property at the outset of living together can therefore avoid the acrimony, cost and uncertainty of litigation after cohabitation ends.
- Individual autonomy
Entering into a cohabitation agreement gives cohabitees the flexibility and freedom to organise their financial affairs as they wish, both during and following cohabitation. Current legislation does not entitle a cohabitee to make a claim for maintenance or to claim a share of their former partner's assets as of right, if cohabitation ends. A cohabitation agreement can include clauses for maintenance to be paid to a former cohabitee, to allow for one party to readjust financially after cohabitation ends.
- Preservation of assets
Having struggled to save a deposit, cohabitees are less willing to risk a future dispute arising about ownership of the property. Cohabitation agreements can evidence beneficial interests in co-owned property and ultimately safeguard their investment.
Where parents have gifted, loaned or invested funds to enable a child to make their first property purchase and the child subsequently wishes to cohabit with a new partner in the property, parents sometimes insist on the execution of a cohabitation agreement to protect family money invested in the property.
What are the disadvantages of entering into a cohabitation agreement?
- Uncertainty about enforceability
There is uncertainty about whether the terms of a cohabitation agreement will be upheld and enforced by the court.
The view expressed by many commentators is that cohabitation agreements that regulate the financial and property affairs of cohabitees are enforceable. There have however been no recent cases testing this point.
Depending on the parties' circumstances and the complexity of the terms agreed, entering into a cohabitation agreement can be an expensive process.
Despite the benefits that these agreements offer, many cohabitees do not want to incur the additional costs of negotiating and executing a cohabitation agreement.
- Risk of relationship breakdown
Parties can often find it difficult to raise the question of entering into a cohabitation agreement with their partner, particularly where the couple will be living together in property that is solely owned by one of them. Non-owning cohabitees may perceive the request as their partner doubting their sincerity and commitment to the relationship. Some feel contemplating what should happen at the end of cohabitation, before they have even begun living together, indicates doubts about the permanence and longevity of the relationship.
When should you enter into one?
There is no set rule as to when a cohabitation agreement should be executed. If property is being purchased with the intention of it being occupied by cohabitees on completion of the purchase, it is advisable for the agreement to be executed on completion, so that the parties' intentions are clear and have been recorded at the outset.
Alternatively, if the intention to cohabit is formed after a property has been purchased, a cohabitation agreement can be executed at any time, before or after cohabitation has begun.
It is not critical for execution of the agreement to occur before or to coincide with the commencement of cohabitation.
It is more important to ensure that the agreement is not executed at a time when either party could allege that they were in a vulnerable position which was exploited by the other exerting undue pressure or influence on them, as this could render the agreement voidable.
For further information, or to arrange an appointment please contact us on 01274 861096 (Liversedge) or 01423 637272 (Harrogate) or email firstname.lastname@example.org. Please note that we offer a free half an hour consultation.
We offer up-to-date legal expertise and a Divorce & Separation service you can both trust and rely on.
Arrangements for Children
We work sympathetically with both parents to avoid any unnecessary upset for the children involved.
For any couple faced with separation, finances will be a difficult and hotly contested area of discussion.
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