Why Cohabitation Agreements are Crucial for Unmarried Partnerships
Families come in all shapes and sizes and living together as an unmarried couple, or house sharing with friends is common.
Here in the southeast, property prices continue to be among the highest in the UK, so purchasing your first home is a challenge for many people. Particularly in Brighton, shared ownership house purchases are a popular way of getting onto the property ladder.
While we’ve all heard of common law marriage, the reality is that an unmarried couple does not have the same financial rights as those in a civil partnership or marriage.
Let’s consider how cohabitation agreements work, and why they are vital to protect your interest in your home should anything happen in the future.
What are the Benefits of a Cohabitation Agreement?
Many Elaine Parkes clients seek such an agreement when deciding to buy a property, or when another life event occurs, such as having children – but there is no bad time to think about your future.
Just as people with significant personal assets might consider a prenuptial agreement, a cohabitation agreement is a ‘just in case’ provision that ensures both you and your partner have security in place.
Many complex scenarios can arise where an unmarried couple separates, and own property together:
- If you own a home together, then usually ownership will be presumed to be shared equally.
- Should a property be in the name of one partner – which is common when a couple moves in together to an existing home – that individual retains the property’s legal ownership.
- Non-legal claimants need to prove that they are entitled to a proportion of the home, and will need to file a claim under the Trusts of Land and Appointment of Trustees Act 1996. This process can be lengthy, expensive, and requires expert advice to stand a chance of being successful.
- Rights to a property where your name is not shown on the deed must be evidenced by records of financial contributions and documentation that indicates that you were considered an equal owner of the property in effect if not officially.
Claims against a property owned in the name of an ex-partner are possible. Still, a cohabitation agreement is a sure-fire way to reduce the stress, time, and inspections of your personal finances that such a claim requires.
Agreements are also valuable in a rented property scenario. They ensure that both partners agree to things such as financial obligations, and who will take over the tenancy should the relationship come to an end – particularly if only one person is named on the rental agreement.
Which Areas are Covered in a Cohabitation Agreement?
Your agreement with your partner is personal to you – and can cover a wide range of areas.
The essential factor is to discuss what you’d like to include and make joint decisions about the agreement’s provisions.
All parties must understand what the agreement means and seek independent legal advice before signing. If you are unsure about the best structure for your cohabitation agreement, do get in touch, and the Elaine Parks Solicitors team can provide guidance.
Some of the conditions of a cohabitation agreement might relate to:
- Property ownership and obligations to cover the associated mortgage or rental costs.
- Financial assets including joint bank accounts, savings and pension schemes.
- Other assets either bought while cohabiting or before the relationship.
- Arrangements for children, such as contributing to costs and living expenses.
- Who will house pets should the relationship break apart.
As you can see, a cohabitation agreement isn’t solely about your ownership rights to a property. It also covers many aspects of living together, including considerations about the rights of your next of kin.
Many partnerships also look at other safeguards, such as putting a Will in place alongside a cohabitation agreement.
Once you have a cohabitation agreement in place (which takes the form of a deed), you may need to update it should any significant events happen, such as selling a property, buying a substantial asset or having children.
Who Can Enter Into a Cohabitation Agreement?
This sort of deed isn’t solely for romantic couples that decide to live together – they are equally relevant for people who share a property in any other set of circumstances.
You can tailor your agreement as required, for example, including overseas assets, such as a holiday home, according to the law in the country where it is held.
Cohabitees who require an agreement might be:
- Individuals who share a property.
- Co-tenants of a home.
- Friends or relatives that live together.
- Co-parents who live in the same home but are not in a relationship.
- Romantic couples who are not married or in a civil partnership.
- People who rent a property together for business purposes.
Do I Have Automatic Rights to My Home if Cohabiting with an Unmarried Partner?
The reason a cohabitation agreement is crucial is that legislation is not always relevant to different living circumstances.
If one partner is named on a deed of ownership or tenancy agreement, it can take a significant amount of time to file a claim, should that relationship end.
In some cases, it can also be challenging to find evidence to show the intent of the original informal agreement. This must prove that, when you and a partner initially moved in together, your mutual understanding was that you both had the same rights to the property you shared.
Should a relationship break down be contentious, that might mean needing to submit bank statements or proof of financial transactions showing who paid the rent or mortgage payments, and which partner covered costs such as utility bills and council tax.
There is a Bill called the Cohabitation Rights Bill, which has been in circulation for several years – and had its first reading in the House of Lords back in February 2020.
In time, should the Bill be passed, it would mean that cohabitants have automatic financial protection, whether relating to cohabitants who have gone their separate ways, or when a person passes away and is survived by a cohabitant to whom they were not married or in a civil partnership with.
However, in the meantime, it remains vital for cohabiting partners to be proactive about protecting their rights and entitlements.
A cohabitation agreement is an excellent way to clarify exactly what those rights are, as a safety net for both partners.
For more information about cohabitation agreements, and what safeguards they offer, get in touch with the Elaine Parkes Solicitors team to arrange a good time to talk.