What is a Cohabitation Agreement?

More and more couples today choose to live together before they get married or enter a civil partnership – or indeed, never get married. Whilst this is not generally a problem for society, it can cause problems when it comes to the state of the property and other assets if the couple breaks up. If you have been living as a couple in a property, it is important that each person’s rights are defined should there be a separation.

A cohabitation agreement is a contract between the two parties that stipulates what will happen in terms of assets if they break up. It can give reassurance to both parties, protecting assets if desired, or likewise, enabling that those assets are divided despite not being married.

What does is a Cohabitation agreement cover?

A cohabitation agreement essentially works in a similar way to a prenuptial agreement (without the couple needing to get married). It can be used to cover several aspects of the individual’s and the couple’s finances, allowing them to provide details about their wishes for assets in the event of a relationship breakdown. Cohabitation agreements can include:

  • Details about what will happen to the home
  • Details about pre-owned assets and what will happen to them
  • Whether the economically weaker partner will be compensated (for taking time out of a career to bring up children, for example)

Do cohabiting couples have the same rights as married people?

If you are a cohabiting couple, you do not have the same rights as a married couple therefore a cohabitation agreement can be important in helping both parties feel secure in their relationship. It means that you will have already dealt with the potentially contentious issues if you break up, making it an easier process, ensuring that everyone’s rights are covered and that there are no misunderstandings.

What happens to the house if we separate?

If you are a cohabiting couple and you separate, many couples are surprised to find out that they do not have the same rights as if they were married. Many couples assume that if they have lived together for a certain amount of time, they have equal rights over the house that they have been living in, however, this is not the case. When a couple is married, the court looks to divide assets fairly between the two, however, if the couple is purely cohabiting, this is not necessarily the case.

If you are cohabiting, the outcome of what happens with the house depends on the arrangement that you already have:

  • If you hold the property as joint tenants – The presumption is that each party holds 50:50 shares in the property regardless of the amount that was put in by each person. This half and half share will also be honoured if the couple separates.
  • If you hold the property as tenants in common – This is similar to joint tenants, except that the shares of the property do not necessarily need to be 50:50. The percentage ownership of the property can be split differently, for example, according to the amount of money that each party has paid in.
  • If you have moved into your partner’s home – In this case, you will normally have no rights over the other person’s house. However, if you can show that you have been paying the mortgage, you may get a share of the house if you separate. Normally you would need to go to court and prove that you have a financial stake in the property to have any rights over it.

If you find yourself as a cohabiting couple and do not wish for one of these outcomes, it is important that you make a cohabitation agreement.

How will joint savings and bank accounts be divided?

If, as a cohabiting couple you have shared savings or bank accounts, which you both access and pay into, it is down to the couple to decide how the money is split. If, however, you cannot agree, you might need to go to court for a ruling on how the money is divided. If you cannot show that you have contributed to the account, however, it might be difficult to persuade the court to allow you to get a share of this money.

A cohabitation agreement can be used to stipulate this division.

Will my personal assets be protected in the cohabitation agreement?

If you are not married, your personal assets that were owned before cohabiting will normally stay with you. Anything that was bought from a joint account will be split 50:50 unless you have a cohabitation agreement that says otherwise. In your agreement, you can define exactly how you wish personal assets to be split in the event of a breakup.

What happens to my pension?

Different pension schemes have different rules about cohabiting couples. You should check the scheme details to understand what the policy is. For personal pensions, you have the right to decide who is covered in the pension and these wishes should be honoured.

How can I look after my children's financial interests?

If the couple has children, both parents have equal responsibility for them regardless of whether they are living together or not. Often the parent that does not live with the child will pay Child Maintenance payments for their upkeep.

How much do cohabitation agreements cost?

The price of a cohabitation agreement can vary according to the solicitor. Some of them offer a fixed rate for the agreement, or others may charge you according to the amount of work that needs to be done and the complexity of the contract.

Can my partner, who owns our house, make me leave the property?

If you are not married, you do not have an automatic right to stay in the house if you do not own it, co-own it, or have not contributed financially to it. There are some situations, however, when you can apply to stay in the property – if you are a victim of domestic violence, for example, or if you believe it to be beneficial to a child. In this case, you might need to go to court to apply for it.

When should I draw up a cohabitation agreement?

A cohabitation agreement can be drawn up at any time. Some people choose to draw one up when they are moving in together, or others afterwards. It is important, however, that you regularly review the agreement to ensure that it is up-to-date, including at moments of life events such as the birth of a child.

What happens to our cohabitation agreement if we decide to marry?

If you decide to get married as a couple, it is recommended that you change your cohabitation agreement into a prenuptial agreement if you wish to keep the details the same. You can do this through a specialist solicitor.


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