Cohabitation Agreements are also sometimes called Living Together Agreements. There may also be a crossover with these agreements with property co-ownership trust deeds when buying a property. We offer an experienced and cost effective drafting service.
The best way of thinking of these Agreements is that they are important in any relationship where you aren’t married and which you believe, or already is, a long term relationship.
Why it’s important to get a Cohabitation Agreement in place
There are some 3 million unmarried couples in the UK and many of these are unaware that there is a fundamental difference in the legal rights of married couples and unmarried couples, who have no rights in law unless they are created between them. A contract between a couple is therefore very important, even more so where there are children.
In our experience, couples tend to avoid the issue of getting an agreement in place as they believe it may indicate a degree of mistrust but in fact, the better way of looking at it is that having a cohabitation Agreement is a symbol of commitment to the long term and a commitment to ensuring that your partner has reassurance about assets.
Also, being realistic, just as with any relationship, married or unmarried, there are no guarantees of staying together long term. the last thing you want or need is a legal dispute, which will be costly and cause friction, if you do split up.
What should be included in a cohabitation agreement?
This of course will depend on what assets each of you has and this is where experienced legal advice can help because there are many options. The Agreement may not necessarily just include obvious assets such as a property, and it can also include practical items and logistical items. For example, an agreement that simply sets out that, even where one party owns a property legally, the other is entitled to a percentage of equity, of itself doesn’t deal with the practicalities of breaking up. Would the minority owner have to wait, perhaps years or longer till the majority owner wants to sell or should there be a mechanism for what should happen ? Typically, in that scenario, you would want clauses giving the majority owner the option to buy out the minority, within a certain time, at a price to be agreed or independently valued, failing which the property should be sold. This is just one example of the many variables.
Typically, the following issues, as a minimum, ought to be considered:-
- property ownership and what happens if you split up
- contents of property such as expensive furniture or electrical items
- maintenance for any children
- joint bank accounts and jointly incurred debts. As regards debts it is always worth remembering that with a joint debt, the creditor will have the choice whether to pursue either or both of you. You could end up having to fully pay the whole debt, so a cross indemnity should be included, so that the other party would need to indemnify you if you pay part of his or her share
- contributions for rent, mortgage or household bills
- what happens if one of you dies? Should you each have life insurance nominating the other party as beneficiary?
- pensions – what happens if one of you dies? Do you need to nominate your partner as beneficiary
- Wills – should also be considered as part of a cohabitation agreement
- pets – disputes occur more often than you may think as to what happens if you split up
Don’t forget to review your cohabitation agreement
You may already have an Agreement in place but as with Wills, it is a mistake to just forget about it. Things change in life, and there are a multitude of circumstances which can result in a need to revisit the Agreement. For example, what happens if you inherit a large amount of money? It is worth including in any initial agreement an agreement to review at set times in the future. As with any form of contract, be aware that you cannot change the terms of the Agreement without the other party’s consent, so, as stated above, practical and logistical issues should be included, as with any contract, using as much foresight as possible, as to how things may change and what should happen if they do.