Guide to cohabitation agreements
The concept of “common law husband and wife” is a popular myth within England and Wales. This myth has led many people over the years to assume wrongly that after a period of time living together, couples will enjoy the same legal rights as married couples. In legal terms, however, the popular definition is meaningless. While it is possible for a cohabitee to acquire an equitable interest in their partner’s property or other assets without an express agreement in some circumstances, such interests are not clearly defined and are often the source of complex legal disputes between couples. The result is that, unfortunately, many people who cohabit fail adequately to protect themselves or their assets in the event of a relationship breakdown. Cohabitation agreements are therefore broadly recognised as the best way for cohabiting couples to prepare for the future, especially where children are involved.
For both parties the uncertainty over interests in the family home or investment properties is a very real and frequent concern. The law surrounding cohabitees’ respective legal interests in property is currently in a state of flux. Bringing or defending a claim for an interest in a property is an expensive and uncertain case to run. It is therefore best for all parties to agree and enter into a sensible and appropriate cohabitation agreement before moving in together. Where this is not possible an agreement can of course be entered into once the parties have begun living together to confirm the extent of each of their interests.
The basic principle on the breakdown of cohabitation is that each party shall keep only what they have by law or contract acquired, irrespective of the fact that they have a relationship. This principle will also include assets that are acquired during the relationship. It is therefore vital to ensure that proper agreement is reached as to the shares in which property will be held or provision will be made in the event the relationship breaks down. [Please refer to our guide on the breakdown of cohabitation for more details]. Any agreement voluntarily reached, without misrepresentation, mistake or duress, will be treated as an ordinary contract between the parties which will be enforceable by the courts, particularly where proper legal advice has been given.
This premise is subject to the Court’s jurisdiction to make provision for children, which cannot be ousted, and may involve maintenance or provision of a home on trust while children are growing up.
Whilst this area of law is in a state of change, cohabitation agreements currently remain the only way that parties can take control of and determine their own financial future. Within the agreement the couple can agree their respective, current and future interests in a property or properties or even prevent their partner obtaining any interest whatsoever. A range of different issues can be dealt with within such an agreement which might include what will happen to joint bank accounts, liabilities under a mortgage and what provision should be made for any children of the family.
Please note that a cohabitation agreement will not protect you in the event that you marry and later divorce. Therefore, if you intend to marry it is strongly advised that you consider entering into a pre-nuptial agreement.
If you are interested in discussing a cohabitation agreement please see How Vardags can help with cohabitation agreements.