What is a cohabitation agreement/Cohabitation Deed?
A cohabitation agreement is a written, signed document, often signed as a deed in front of witnesses. It will generally deal with three principal areas:
- who owns (and owes) what at the time of the agreement, and in what proportions
- what financial arrangements you have decided to make while you are living together, and
- how property, assets and income should be divided if you should split up
Where the agreement is properly drawn up, the terms are reasonable, and each of you has had separate, independent legal advice on its effect, a court is more likely to uphold the agreement in the event of a dispute.
When should I make a cohabitation agreement?
You can make a cohabitation agreement at any time, whether you are about to start living together or if you have been doing so for many years. Your family lawyer can help you negotiate this agreement and can write it down in a way that it is likely to be respected by the court in case there is ever a dispute about it.
You may also seek the assistance of a mediator to agree terms of a cohabitation agreement, or use collaborative law.
Why have a cohabitation agreement?
Unlike on divorce or civil partnership dissolution, there is no particular set of rules that automatically applies if you split up from someone you have been living with. There is no such thing as ‘common law marriage’. Living with someone for a certain period of time doesn’t mean you are automatically entitled to some financial support or to share their property after you split up. Resolving disputes about property without an agreement can be expensive and take a long time. Often the costs in an modest case can easily reach £50,000 - £75,000 for each party and take up to 18 months to resolve. Such cases are highly technical and require experienced specialist solicitors and barristers. Family Arbitration as an alternative to Court proceedings will see that figure reduced but will require the agreement of both parties to Arbitrate in the first instance and that may not be forthcoming. A good cohabitation agreement can mean that areas of potential dispute on separation are reduced or eliminated for a fraction of the costs set out above.
What can be covered in a cohabitation agreement?
Your shared home
It is important to record how the home is owned, and whether there has been any separate agreement or promise that isn’t currently reflected in the legal documents. Who is paying the mortgage? If there are any endowment policies or other savings arrangements linked to a mortgage, what contributions are being made to those and how will they be dealt with if you split up? Are you going to insure each other’s lives?.
Money and paying bills
Many people find it convenient to have a joint bank account when they live together but need to decide what contributions they are going to make to that account. Will the contributions be equal and if not, will you consider the money in the joint account to be equally owned? What will the joint account be used for and when should your personal accounts be used instead? If you’re not using a joint account, who will pay which of the household bills and will this be considered an equivalent contribution to something else? What about credit cards and debts?
Pensions sometimes give you the opportunity to make provision for loved ones. You may wish, for example, to agree nominations for death-in-service benefits.
You should consider who owns and/or will keep items such as furniture and cars. It may be worth setting down now any rules about ownership of important things or a way to sort out any disagreements about them in the event of a separation, for example, each of you picking in turn from a list of items.
Although not legally binding, it is worthwhile thinking about whether you might like to provide for any children over and above the minimum expected by the child support system in the event of your separation (eg in respect of school or university fees), and to set down some expectations about how children would be cared for if you were to live apart.
Reform and changes in the law
If you have an agreement about what you want to happen in the event of your separation, this will take precedence over any new scheme that comes in.
You may need to review the agreement if you move house, have children or your circumstances change dramatically. It’s important to ensure that the agreement is kept up to date.
You should also make a Will so that if you die while living with someone, your wishes can be put into effect. Although it is possible in some circumstances for a cohabitant to inherit, there are no strict rules about what should happen so it is important that you make clear what you want.