It is a very common misconception that moving in together as a couple creates a “common law marriage” and gives you the same rights in relation to each other’s property and finances, as you would have if you were married. This, however, is not the case. Unfortunately for those simply cohabiting, the law offers very minimal, if any, protection both during the time you live together and following the breakdown of a relationship.
You do not automatically gain rights to the family home, for example if you’re not joint owners, or each other’s belongings or assets and neither party is legally obliged to financially support the other. Save for possessions that you have both contributed towards and jointly own, it is generally a case of “what’s mine is mine” and “what’s yours is yours”. Whilst this may have minimal detrimental effect during the time you are living together, if the relationship breaks down, the reality is one party could all of a sudden be left with nothing. This is where cohabitation agreements fill a massive gap in the law.
A cohabitation agreement or a living together agreement is an agreement both parties enter into to regulate their financial affairs whilst cohabiting and to set out how any property and money will be divided should the relationship end. Such agreement is executed by way of a deed and is therefore legally binding as long as both parties have obtained appropriate independent legal advice.
Provisions you may wish to include for during the relationship include arrangements for: -
- Payment of household expenses
- Payment of the mortgage
- Contributions towards joint bank accounts
Provisions you may wish to include in the event of the relationship breaking down include arrangements for: -
- Dealing with the family home, for example, whether you would sell it or have the option to buy out the other person’s share
- Financial support for either party
- Division of your respective and joint property and assets
Whilst it may not be the most romantic gesture to start assessing your financial positions and considering what will happen if your relationship ends, there are 2 main advantages to having a cohabitation agreement drawn up: -
- · Certainty - both parties will know exactly where they stand in terms of their responsibilities and entitlement to property and money
- · Fairness – by amicably agreeing to how everything should be distributed in the event the relationship ends, both parties should end up in a position that adequately meets their respective needs rather than potentially leaving one party with nothing.
If a cohabitation agreement sounds like something you and your partner could benefit from, the next step is to both instruct separate solicitors and begin discussions as to what will be included in the agreement. Remember - a few potentially uncomfortable conversations now could save you a futile battle further down the line if something goes wrong!