Cohabitation Agreement UK: All You Need To Know! 💏🏡
Dec 06, 2023 | Victoria Clarke
This detailed guide has been prepared by one of our family law experts and looks into what a cohabitation agreement is, their purpose, and whether you really need one.
It is increasingly common for couples to choose to live together before getting married. In fact, whether due to the costs associated with a wedding or just personal preference and changing trends, more and more couples are choosing never to have their relationship legally recognised through marriage or civil partnership.
Unfortunately for these couples, the idea that something called “common law marriage” can confer legal rights on cohabiting but unmarried partners is a myth.
Why Cohabitation Agreements are essential for unmarried couples
Despite what many believe, couples who live together do not have the same legal rights as couples who are married or in a civil partnership. They may have limited rights such as:
Claims arising from financial contributions they may have made towards their partner’s property;
Rights to financial support for any children of the relationship;
Claims on the death of their partner (depending on circumstances).
However, in general, couples who live together are otherwise unprotected.
As long ago as 2007 the Law Commission published a report recommending that the law affecting cohabitants’ property and finances when their relationships end (whether by separation or by death) should be changed to provide greater protection. The Government announced in 2011 that it would not take the Law Commission’s proposals forward.
Given the current state of UK law, the question for many couples is what can they do if they don’t wish to marry or enter into a civil partnership, but do wish to put in place financial arrangements in the event of their relationship breaking down? The answer is to enter into a cohabitation agreement.
At Elite Law Solicitors, our family law team have extensive experience of advising and assisting clients in relation to the preparation of cohabitation agreements.
On 11 October, Victoria Clarke, who heads up our Family Law Department, discussed Labour’s proposals for cohabitation reform with Andrew Marr on LBC.
You can watch the full discussion below. Alternatively, you can continue reading our detailed guide for everything you need to know on cohabitation agreements.
What is a Cohabitation Agreement?
A cohabitation agreement records arrangements between two or more people who have agreed to live together, as a couple or otherwise. It records each party’s rights and responsibilities in relation to the property where they live or intend to live together, financial arrangements between them, both during and following cohabitation and the arrangements to be made if they decide that they no longer want to live together.
Every cohabitation agreement is slightly different depending on the needs and circumstances of the couple creating it, but in every case the agreement will record essential facts regarding a couple’s ownership of assets, as well as arrangements for if the relationship breaks down.
A cohabitation agreement can also cover other arrangements, such as how children will be supported after a break-up, as well as how things like bank accounts and debts, household bills, cars and other shared vehicles, and even care of pets will be handled at the end of the relationship.
What are the benefits of a Cohabitation Agreement?
While it might feel overly pessimistic and unromantic to put time into planning for the breakdown of a relationship, a cohabitation agreement can provide valuable certainty and peace of mind and offer the following advantages:
A well drafted cohabitation agreement records each party’s legal and beneficial interest in the property. This reduces the possibility of a dispute about ownership if cohabitation ends and helps reduce the chances of costly litigation.
Entering into a cohabitation agreement gives cohabitees the flexibility and freedom to organise their financial affairs as they wish, both during and following cohabitation.
Cohabitation agreements are also often entered into by cohabitees who are beginning a new relationship following divorce or dissolution of a civil partnership. These cohabitees are more aware of the financial repercussions of relationship breakdown. Many therefore enter into a cohabitation agreement to safeguard their own financial security and, in some cases, to protect a future inheritance for their children.
Are Cohabitation Agreements legally binding in the UK?
Cohabitation agreements were historically void on the basis of public policy as they were deemed to encourage sexual relations outside marriage, but with the passage of time and changing social values, the law began to distinguish between “meretricious” agreements (where sexual relations form part of the consideration) and agreements that regulate financial and property affairs between cohabitees.
The view today is that cohabitation agreements that regulate the financial and property affairs of cohabitees are enforceable although there are no recent cases testing this point.
The Law Commission has expressed the view that “insofar” as cohabitation agreements are lawful, they are governed by ordinary rules of contract and can therefore only be challenged on any of the ordinary contractual principles such as fraud, duress, undue influence, misrepresentation or mistake.
A properly drafted agreement will ensure that it complies with contractual requirements and will reduce the likelihood of arguments about validity or enforceability.
When should I draw up a Cohabitation Agreement?
A cohabitation agreement can be drawn up at any point during a relationship, both before a couple begins cohabiting or after they have already been living together for many years.
More important than when the agreement is first created, is how often it is updated. As with any legal document, it is important to periodically review a cohabitation agreement and to amend it as necessary, in line with any major life events that may have occurred since the agreement was first created (such as buying a property, having a child, becoming the beneficiary of an inheritance, or one partner undergoing some other significant change to their financial status).
What should I include in a Cohabitation Agreement?
One of the benefits of a cohabitation agreement is that each agreement is particular to the couple who are signing it and that during the process of creating the agreement the couple can choose exactly what they want it to cover. That being said, there are some fundamental elements that any good cohabitation agreement should include. These are:
Property owned prior to cohabiting
If one partner in a couple owns property that was purchased separately from their partner, a cohabitation agreement can be used to confirm that this asset will be kept separate so that the other partner doesn’t have a claim over it.
Property jointly purchased
If a couple purchases property together but only one partner is named on the agreement (usually the case if the other partner has a previous mortgage, debt, or other extenuating circumstances that may make them less likely to be approved by a lender) then a cohabitation agreement can be used to record their respective beneficial ownership of the property, along with the proportion of the property each partner is entitled to.
Note that if joint owners, both partners will be legally entitled to stay in the property if the relationship ends – what exactly happens to the property will need to be decided between them.
Contributions to mortgage payments, and what those contributions entitle a partner to who is not an official owner of the property can be recorded in the cohabitation agreement.
Likewise, how bills and other accounts set up in the couple’s joint names will be handled after the relationship ends is something that a cohabitation agreement can be used to decide on.
Inheritance and Wills
While not technically a part of the cohabitation agreement, it is also important to recognise the increased necessity of having a will when cohabiting but unmarried.
Financial uncertainty can be particularly traumatic at a time that is already likely to be emotionally challenging, therefore having an up to date will that confirms each partner to be the other’s benefactor is just as important as drawing up a detailed cohabitation agreement.
Often, couples find it convenient to deal with both of these important legal documents together.
Independent legal advice on Cohabitation Agreements
Finally, while again not something that goes into the cohabitation agreement, seeking independent legal advice is a vital part of the process of drawing up the agreement.
For the agreement to be legally binding both parties must be able to demonstrate that they agreed to the conditions set out in the document willingly and with full knowledge of what they mean.
Should the couple break up and the agreement reach the court, it is much more likely to be upheld if each party can show that they received legal advice before signing anything.
How much does a Cohabitation Agreement cost?
The cost of a cohabitation agreement can vary depending on the complexity of the couple’s affairs.
Typically, one partner’s solicitor would take on the work, which includes an initial meeting, drafting the document, amending it, and finally signing off on it. This solicitor can also provide one party with legal advice, while the other partner will need to pay for their own, independent legal advice on the agreement.
Some solicitors will charge hourly while others offer a flat rate. Typically, a couple can expect to pay anywhere between £750 and £3,000, plus another £500 for separate legal advice from a second solicitor. The fees will of course vary depending on the complexity of the couple’s affairs.
While the cost of a cohabitation agreement may seem expensive to some, it is minimal compared to the cost of settling affairs in court, where costs can easily reach into the tens of thousands of pounds.
Does a Cohabitation Agreement have to be signed before completion?
Along with each party receiving independent legal advice, the document being set out as a deed, and the document being kept up to date, the cohabitation agreement must be signed in order for it to be considered legally binding.
Can I legally prepare a DIY Cohabitation Agreement?
While there are templates available online that offer the possibility of creating a DIY cohabitation agreement at a fraction of the usual price, one of the great benefits of a cohabitation agreement is that it can be made bespoke to any couple’s needs – therefore a template may easily miss something out.
As covered above, for a cohabitation agreement to stand up in court each partner must also seek independent legal advice, so in this case it would make sense for a solicitor to have at least some hand in the drafting of the document too, to ensure that it is both comprehensive and legally sound.
Can a Cohabitation Agreement be modified after it is created?
Yes, a cohabitation agreement can and should be modified at regular intervals as the couple’s relationship progresses and as significant life events occur. Some reasons to amend a cohabitation agreement could include: having a child, receiving an inheritance, a significant change in earnings, one partner becoming seriously ill or disabled, or if the couple decides to marry or enter into a civil partnership.
Does a Cohabitation Agreement still stand if you get married?
Marriage significantly alters the legal status of a couple, which will invalidate a pre-existing cohabitation agreement. So, if your legal status as a couple has changed to that of a married couple, it helps to know how this changes things.
A cohabitation agreement is designed to reflect the couple’s circumstances and intentions while they are cohabiting. Upon marriage, it is advisable to prepare a prenuptial agreement which aligns with the new legal framework and marital status, to replace the cohabitation agreement.
Consulting a legal professional for guidance is crucial when transitioning from cohabitation to marriage to ensure that any agreement accurately reflects the couple’s current and future intentions.
What is the difference between a Cohabitation Agreement and a Prenuptial Agreement?
While both a cohabitation and prenuptial agreement are available to unmarried couples, and both determine what happens should the relationship break down, there are several important differences between the two agreements.
A cohabitation agreement is appropriate for any couple who live together and have no intention of getting married or entering into a civil partnership in the immediate future. It determines what happens to assets and finances should the unmarried couple decide to separate.
In contrast , a prenuptial agreement (or a pre-civil partnership agreement) is designed for couples who are preparing to have their relationship legally recognised through marriage or civil partnership and want a different arrangement for their assets and finances than what they are ordinarily entitled to by law, should they divorce or dissolve their civil partnership.
What are the differences between cohabitation and marriage or civil partnership?
Unless a couple are married or entered into a civil partnership, the law will not recognise their relationship in any meaningful way.
Does a Cohabitation Agreement affect your state pension?
A cohabitation agreement does not directly affect your entitlement to your state pension. The state pension is calculated based on an individual’s National Insurance record and not their marital or cohabitation status.
Cohabiting couples should be aware that they are not entitled to receive any part of their partner’s state pension, unlike married couples or civil partners.
It is also important for cohabiting couples to plan their retirement individually, considering private pensions and savings, as they do not have any legal rights to pension sharing as married couples or civil partners do.
What happens to a Cohabitation Agreement if one party dies?
A cohabitation agreement does not override a Will. In the event of death, the deceased partner’s estate will be distributed according to their Will or, if there is no Will, according to the rules of intestacy.
A well-drafted cohabitation agreement can include provisions for what should happen to the property and other assets in the event of one partner’s death, but these provisions must be reflected in a valid Will to be enforceable. If the provisions are not reflected in a valid Will, you can still make a claim against your deceased’s partner’s estate if the cohabitation agreement said those provisions should have been in the Will.
Cohabiting partners should create or update their Wills in conjunction with their cohabitation agreement to ensure that their wishes are legally recognised. Relying on the expertise of a specialised legal professional can help with this.
Difference between a Cohabitation Agreement and a Declaration of Trust
A cohabitation agreement is quite a broad agreement that outlines the financial arrangements between cohabiting partners. It can cover various aspects like property rights, responsibilities for bills and debts, and arrangements for children if the relationship ends.
A declaration of trust is a legal document that specifically outlines the ownership and financial interests of a property. It clarifies how much each party owns and what happens to the property if the relationship ends or if one party wants to sell their share.
While a cohabitation agreement covers a wide range of issues about the relationship, a declaration of trust is narrowly focused on property matters.
Both documents are legally recognised in the UK and can provide clarity and protection for cohabiting couples, but they serve different purposes and should be used in conjunction with each other for comprehensive coverage.
How Elite Law Solicitors can help
People enter into cohabitation agreements for a number of reasons.
Such agreements can regulate interests in property, bank accounts, payment of household bills and can also prevent future claims against properties.
Victoria Clarke is a Partner and the head of our family law team; she has extensive experience of advising and assisting clients with cohabitation agreements. She possesses the experience, legal expertise and practical know-how to guide you through the process and prepare a bespoke cohabitation agreement tailored to your specific circumstances.
Victoria regularly provides specialist legal advice on cohabitation agreements to clients all over the country. In addition to office meetings, she offers remote meetings via telephone and video conferencing software and can assist you wherever you are based.
Book a FREE initial consultation
If you have any queries relating to any of the issues discussed in this article or would like any advice or assistance in relation to preparing a cohabitation agreement, please book a free initial consultation with one of our specialist cohabitation agreement solicitors by calling 0800 086 2929, emailing firstname.lastname@example.org or completing our Free Online Enquiry Form.
The content of this article is for general information only. The information in this article is not legal or professional advice. If you require legal or professional advice you should obtain independent expert advice from qualified family law solicitors such as those within our firm.
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