It was the UK’s Deputy Chief Medical Officer that encouraged couples to move in together during the Coronavirus pandemic, or else stay apart until further notice. As a result, high numbers of couples (the exact figure is unknown), decided to take the monumental step of moving in together. And, as a result, we at Prosperity Law saw an increase in the number of cohabitation agreements being put in place. And we’re delighted to say this increase has continued.
What is a cohabitation agreement?
A cohabitation agreement is a legal document between unmarried parties who live together. It outlines each party’s responsibilities for payments, children, and even pets, as well as arrangements for finances and assets during the relationship and also in the event of separation, illness, or death.
As well as the above, a cohabitation agreement is especially important where owned property is concerned. The document will usually outline each party’s contributions towards the property, what each individual’s share of the property is, and what should happen in various circumstances in the future, including if the property were to be sold.
Why is it important for unmarried parties?
When you’re married your estate, finances, and assets are governed by clear and well established legislation . When you’re cohabiting, you don’t have this protection. Put simply, the law doesn’t recognise cohabitees like it does with marriages. Cohabitee’s are governed by trust and property principles, which are complex, costly and are not predicated on fairness or equality, as most would expect.
For example, if you’re unmarried you will find the following:
- You are not entitled to provide financial support to each other, in the event of separation.
- You won’t be able to apply for pension sharing rights, for yourself or your children, in the event of one party’s death.
- You are unlikely to be granted access to your partner’s bank account.
- In the event of one party’s death, if a will is not in place, the estate will go to a family member. You can make a claim, but it can be time-consuming and costly to do so.
In the case of a relationship breakdown, the cohabitation agreement outlines who’s entitled to what, all of which has been agreed by both parties.
For example, Person A owns a property and Person B moves into that property, alongside them. They split the household bills, including mortgage payments, but Person A remains the named person on the mortgage. After three years, they separate. With no cohabitation agreement in place, Person B has little to no entitlement over those monies paid towards the mortgage, during the three-year period. To challenge Person A, would likely be stressful and extremely costly.
Who is it relevant to?
Cohabitation agreements are most commonly put in place by unmarried couples. But they are also relevant in other circumstances where unmarried parties might live together. For example:
- Where friends or siblings have co-purchased a property
- Where older parents have built, or live in, an annex of a family property.
In each of these circumstances, a cohabitation agreement will allow both parties to clearly outline what should happen now and in the future.
Points to consider
- Renting vs buying: Even if you’re renting a cohabitation agreement could be useful to outline living arrangements, and property.
- The cost of a cohabitation agreement can range from £750 – £2,000 That said, negotiations and legal advice surrounding disputes between unmarried parties can cost significantly more if the worst should happen. It’s therefore prudent to put something in place at the earliest opportunity.
- A cohabitation agreement can also include a Declaration of Trust, which offers a second layer of protection and provides precise percentages in regard to each party’s entitlement.
“A Cohabitation Agreement is an effective way for two parties to protect themselves, each other, and their relative estates against the uncertainty of the future. It can be as detailed as the parties require, covering a variety of circumstances.
We’re seeing an increasing number of cohabitation agreements being put in place, likely due to the ongoing increase in unmarried couples living together and people becoming more aware of their rights, or lack of. I would like to see it become more common, it is most certainly something our conveyancing team ensure each and every client is aware of when purchasing their property.
At Prosperity Law, our Family team, Trust & Estates team, and Conveyancing team all work closely together, within the same office, ensuring we’re able to work in partnership ensuring all of our client’s needs are fully met.
To discuss a cohabitation agreement with our family team, please email enquiries@prosperitylaw.com
