Cohabitation Agreements

A cohabitation agreement is a legal document in which an unmarried couple sets out how they will arrange their financial affairs while living together; and if they were ever to split up. Cohabitation agreements can vary in scope. But their primary purpose is normally to establish each party’s financial relationship to the property in which they will live.

It can often be the case that one person has a greater financial interest in the home they plan to share. Perhaps that person owns the property outright? Or they have a mortgage on it in their name alone? Or if the property is owned by members of their extended family? In these circumstances, a cohabitation agreement can establish current and future property ownership rights in a way that gives both parties clarity and peace of mind from the outset.

A cohabitation agreement can also establish intentions regarding the way their shared home will run. It can, for example, set out who will pay - and how much - towards any mortgage, as well as rent, bills and household expenses.

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Cohabitation agreements can also set out what should happen to any assets and liabilities if the relationship comes to an end. It can record ownership of personal items such as cars, furniture, or art, which may be used by both cohabitants when they lived together, but would be retained by the original owner if cohabitation ends.

Cohabitation agreements are not necessary for everyone considering sharing a home with another person. However, they can be especially useful for couples:

• Within which there is a significant wealth disparity
• Where one person owns the property into which their partner is moving in
• That have decided to live together later in life, but remain unmarried
• In which one or other person has significant, individual financial responsibilities (for example dependent children)
• Where there is significant personal or inherited wealth

A cohabitation agreement is not a substitute for a prenuptial agreement as is not appropriate for couples which intend to get married. However, cohabitation agreements can often act as precursors to a prenuptial agreement. Cohabitation agreements can specify that the parties will enter into a prenuptial agreement should they decide to get married.

Nor are cohabitation agreements just for people in romantic relationships. They can also be used, for example, by friends or siblings who want to secure their property interests before living together.

Drawing up a cohabitation agreement can seem a daunting prospect, as it involves engaging with personal issues. Peters May have long experience guiding clients through this process in way that is sensitive, and practical, and which gives everyone the peace of mind they need.