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Cohabitation Law FAQs
Discover our cohabitation law servicesFAQs
There can be many reasons and situations in which making a cohabitation agreement could be advisable, such as before buying a property or moving in with a partner.
Cohabitation agreements provide clarity and security by ensuring that both parties are aware of where they stand should the relationship ultimately break down.
A cohabitation agreement can make family life easier, giving all parties the flexibility and freedom to organise their financial affairs as they wish.
A well-drafted agreement sets out and evidences beneficial interests in co-owned property and ultimately protects that interest (for example, if one party’s family has gifted money towards the deposit).
Cohabitation agreements can facilitate quick resolutions to financial matters in cases where there is an acrimonious separation, providing clarity on what each party is entitled to and in what proportion. This can also avoid the potential costs of litigation upon separation, as many of the technical issues relating to the separation and the mechanics of valuing and dividing property will have already been agreed.
The fundamental issue regarding cohabitation agreements is the uncertainty about whether the terms of the agreement will be upheld and enforced by a court. Although these types of agreements aren’t completely legally binding, the courts may well decide to attribute significant weight to them.
Some people are cautious of broaching the topic of entering into a cohabitation agreement with their partner as the suggestion may be interpreted as a lack of commitment to the relationship. Without careful consideration and management, this can carry the risk of relationship breakdown.
Cost is also a factor to consider when deciding whether to proceed with a cohabitation agreement, particularly if the parties’ circumstances and the terms proposed are complex. It is, however, much better to enter into a cohabitation agreement than not.
A cohabitation agreement records a cohabiting couple's intentions and how they wish for any property to be divided in the event of separation.
However, the agreement can also record more basic issues such as how any property where they are living will be run, including who will be responsible for which outgoings.
A cohabitation agreement can cover a variety of different issues, from how a property will be held to how the parties’ finances will be operated during their cohabitation.
The most common areas that can be covered include:
- how rent, mortgage or household bills are paid
- financial matters, such as what happens to joint bank accounts or pensions
- respective beneficial interests in property (whether owned jointly or solely)
- financial arrangements for children.
Cohabitation agreements can be entered into by any cohabiting couple. The most common scenario is when a couple begin cohabiting and are purchasing a property.
While a cohabitation agreement is a legally binding document, The Law Commission has expressed reservations about enforcement. Cohabitation agreements are governed by ordinary rules of contract and can therefore be challenged on any of the following ordinary contractual principles:
- fraud
- duress
- undue influence
- misrepresentation
- mistake
- illegality on other grounds.
The key, however, is to remember that if a cohabitation agreement is entered into free of any of the above principles — and if both parties have obtained independent legal advice — the Court is more likely to uphold it.
If a property is owned by one party, it’s possible that the other may be able to make a claim under the law of trusts.
A resulting trust can occur when:
- One party contributes towards the purchase price of a property in the other’s name.
- One party transfers property to another but receives nothing in return.
A constructive trust can occur where:
- There has been an agreement to share ownership of the property — either directly, by way of an express agreement, or indirectly, by making financial contributions (such as to the mortgage or purchase price).
- One party is reliant upon this agreement.
In such scenarios a cohabitation agreement should be entered into to ensure that the party who is financially contributing to the property but does not legally own it is protected in the event that the parties separate.