What is a cohabitation contract and what do they include?
A cohabitation contract – also known as cohabitation agreements, Living Together Agreements and ‘No-Nup’ agreements – is a contractual agreement between an unmarried couple which sets out the agreed terms of their cohabitation.
The exact terms of the contract will vary depending on the circumstances and wishes of the parties. However, it will usually detail each party’s rights and responsibilities in relation to the property in which they live, the financial arrangements between the two of them and what would happen if their relationship breaks down.
For example, the agreement could outline who owns the home. If one person owns the property, they may or may not want the other party to have a share in it. If the parties are planning to buy a home together, will they own it as joint tenants or tenants in common? If tenants in common, in what shares? If there is a mortgage, how will this be paid?
Aside from the mortgage, other financial arrangements could be outlined. For example, how will the household expenses and bills be paid? Will the bills be split between the parties? How will they be split? Will the parties open a joint bank account and what contributions will they each make to this account? Details of the parties’ incomes, savings and any debts will usually be recorded.
The parties could also detail how their personal possessions will be divided should they break-up. For example, if they have the use of a car or cars between them, they should state how these are owned.
It is probably not possible to cater for every possible outcome, so the parties may agree to review the contract after a certain period of time or agree to enter into a new agreement if there is a change of circumstances, for example if they were to have a baby.
Why should cohabitees consider entering into a cohabitation contract?
The main reason for entering into a cohabitation contract is to provide protection. Research has found that many cohabitants believe that couples who are living together for a certain length of time are treated by the law as if they were married. This is known as the ‘common law marriage myth’. In actual fact, cohabitees have far fewer rights than spouses do.
Firstly, for married couples there is a legal duty to support each other financially. A party may be required by the court to continue supporting their ex-partner if their marriage breaks down. Secondly, each party to a marriage has the right to remain in their shared home – regardless of who bought it. Furthermore, if one spouse dies without leaving a Will, the other spouse will inherit some or all of their estate under the rules of intestacy.
Cohabitees do not have these rights. They do not have an automatic share in the property, nor can they claim support from their ex-partner. This means that the owner of the property could decide to sell it and the formed cohabitee would not be entitled to any of the proceeds, regardless of how long they had lived there and paid the bills. If one party dies, unless they have made provision in a Will, their cohabiting partner is not entitled to anything.
There are ways for a cohabitee to establish rights, for example by establishing the existence of a trust. However, this is costly and uncertain. With a cohabitation contract, couples can avoid uncertainty, litigation and expense in the future, not to mention further emotional hardship.
Are they enforceable?
Cohabitation contracts are governed by the usual principles of contract law. Therefore, a cohabitation contract is likely to be enforceable if the couple can establish that they intended it to be legally enforceable, they had both agreed to the terms without pressure, the terms were precise and were not contrary to public policy. The agreement should ideally be made by deed. It should also include a clause stating that the parties have each received independent legal advice, which will help to avoid questions of undue influence.
Should you require legal advice in respect of your situation please contact us.
The information given on our website and blog is of a general nature and may not be relied upon as legal advice as every case will be different to some extent. We would need information regarding specific circumstances and requirements in order to advise individual clients.