I would like to draw up a co-habitation agreement, as I own my house and my partner is moving in next month.
What does the agreement need to include? (JM)
Having a cohabitation agreement reduces the chance of arguments later down the line
MailOnline’s property expert Myra Butterworth replies: If a partner is moving into a home that you own, then they may end up paying you rent or contributing in other ways.
This may all be decided amicably when a partner moves in, but in the unfortunate event of a split the property owner may find their ex claiming they are due a stake.
Some people may consider drawing up a cohabitation agreement as an unromantic step too far. But there is no need to feel uncomfortable about raising these matters with your partner.
A cohabitation agreement helps to provide clarity and certainty about your positions and your partner should not be offended that you want to safeguard ownership of your home.
A cohabitation agreement tends to cost around £750 to £2,000 plus VAT. But it is a good investment if you compare this to the potential costs if there is a dispute if a couple separate.
We ask three law firms for their advice about what needs to be included in a cohabitation agreement.
Sue Andrews, a partner at BP Collins’ family practice, says: Many people believe that cohabiting couples have equivalent rights to married couples once they have lived together for a period of time (the myth of ‘common law marriage’).
But this is not the case in England and Wales. People who live together never acquire the same rights and responsibilities no matter how long they are together and regardless of whether or not they have children.
Nevertheless if you own your own property, or are moving into a partner’s property, there are things you need to consider. It might seem unromantic at such a time, however thinking about them now should avoid, at best, disagreements and, at worst, legal proceedings if things do not work out between you.
Before your partner moves in, you need to think about who is going to pay what and also whether you intend such a payment to give your partner an interest in your property or is it simply to be akin to the rent your partner would pay if living elsewhere.
This is important if you are to avoid a bitter dispute if the relationship breaks down – your then former partner perhaps claiming an interest in your home because of monies he or she paid or because he or she carried out works on the property.
First, you need to have a candid discussion with your partner about what they will contribute and also whether you intend your partner to acquire an interest in your home.
Having additional money might be nice but it doesn’t follow that that makes it fair for your partner to acquire an interest in your home.
They might for example be paying less than they previously were in rent, and you could afford the mortgage repayments and other outgoings anyway without those additional monies.
You should then take legal advice. Each couple is different but there are a number of options, which a solicitor is likely to suggest:
- One is a simple and relatively inexpensive deed of waiver to record you and your partner’s agreement that, regardless of payments that he or she makes or work undertaken they are not to acquire an interest in your property.
- However, if you agree that they are to acquire an interest then a declaration of trust should be prepared, again to record what you both agree your respective interests should be or might become over time, subject to payments being made or work undertaken.
- Another option is a cohabitation agreement. This is a more lengthy document and is likely to be suggested if you want to record your agreement about matters over and above property ownership. It could deal with for instance who pays what bills and if there are children child care arrangements and support. It might seem ridiculous but we have also been asked to include such things as who has control over the TV remote or who puts the bins out.
There is no need to feel uncomfortable about bringing up these matters with your partner.
You both need clarity and certainty about your positions, and your partner should not be offended that you want to safeguard your ownership of your home. The options above will provide reassurance to you both if the relationship comes to an end or in the event of one of you dying.
You also need to remember that marriage does create rights and obligations so if or when that is on the cards you should consider a prenuptial agreement.
Remember that these types of agreement are not just for the wealthy. It is sensible to have this sense of security in relation to your home, regardless of its value and to avoid potential future conflict.
What is a co-habitation agreement?
Linzi Perriman, associate solicitor at Gorvins Solicitors, says: Unlike with divorce or civil partnership dissolution there are no set of rules which apply when you split up with someone you have been cohabiting with.
Contrary to popular belief there is no such thing as a ‘common law marriage’. Having a cohabitation agreement properly drawn up early on reduces the chance of arguments later down the line.
At a time when more people are deciding to cohabit rather than marry this is particularly relevant. The law may change in the future but under the current proposals if you have a cohabitation agreement this will take precedence over any new scheme which comes in.
Generally, a cohabitation agreement will deal with three main areas:
- Who owns and owes what at the time of the agreement and in what proportions
- What financial arrangements you have decided to make while you are living together
- How property, assets and income should be divided if you should split up
There are the usual legal provisions that need to be included such as factual information about the parties and any children, especially if they will be living at the property, confirmation that both parties’ have received independent legal advice, that the agreement in entered into freely and voluntarily and that the parties’ intend legal consequences to flow from it.
It is essential that both parties’ exchange full and frank disclosure about their income, assets, liabilities and pensions to reduce the risk of any agreement being set aside due to misrepresentation.
The agreement should also set out the events which will terminate certain parts of the agreement, the law that will apply should any dispute arise and something called a ‘severability clause’ which stops one unenforceable clause rendering the whole agreement invalid.
Like a will, it is worth bearing in mind that a cohabitation agreement is a living document and a review or variation clause should be included to reconsider the agreement if your circumstances change dramatically, you decide to have a child or move house. This ensures the agreement accurately reflects your circumstances.
A cohabitation agreement is a good investment if you compare this to the potential costs if there is a dispute if a couple separate
What should I include if my partner is moving into my home?
- A Declaration of Trust – provided that no earlier declaration of trust has been executed, you should include a declaration of trust confirming that the non-owner has no beneficial interest in your pre-acquired property. This is to try and prevent a situation where the non-owner tries to assert a claim to the property if your cohabitation ends. If included it will be treated as conclusive evidence of interests under a trust of land meaning it will be upheld by the Court in the event of dispute unless there is mistake, fraud, misrepresentation or some cogent reason leads the Court to set aside, or vary the declaration.
- It is recommended that the non-owner is given a licence to occupy the property during the period of cohabitation to reduce the scope for the non-owner asserting an entitlement to occupy the property. This will allow the owner to provide written notice to be served on the non-owning party at the expiry of which they are required to vacate the property.
It is also worth considering how the following items will be dealt with if you decide to separate and including them within any agreement:
- Other property owned by either of you in joint or sole names
- Fixtures, fittings, household contents and personal property such as cars
- Gifts to either party or to both parties’ for instance by parents
- Money in joint accounts/overdrafts
- Whether you want to make provision by way of pensions e.g. death-in-service benefits
- How household expenses will be paid and by whom
- Whether you want to provide your partner with financial support during/after cohabitation
- Child arrangements setting out whom the children should live and spend time with after cohabitation including any agreement in respect of financial support
- You should consider making a will or updating the terms of an existing will as cohabitees have no automatic legal entitlement to share in the estate of a cohabitee who dies intestate (without a will).
- In the event of dispute whether you agree to try alternative dispute resolution to avoid costly litigation.
- Certain trigger events which might terminate the agreement such as the death of either party, your marriage or by written agreement and the arrangements that will follow following one of these events.
Will it be upheld?
If the agreement is properly drawn up, the terms of the agreement are reasonable and both parties’ have received independent legal advice on the effects of the agreement, then the Court is more likely to uphold the agreement in the event of a dispute.
More recent items being included in cohabitation agreements include who can say what on social media in the event of a separation
Phil Barnsley is a Partner and Head of Family with West Midlands law firm Higgs & Sons, says: All the usual stuff that you would imagine has to be included in such an agreement, including disclosure of your assets and independent legal advice etc.
However, there are a number of really important areas that have to be covered off for a sensible and effective cohabitation agreement to be drafted that need to be in there. These include:
- Property: However cohabitants are going to own property, they need to be precise and specific about this, as well as financial contributions and a mechanism for dealing with this upon separation (i.e. Agreed valuation method, then one has first option to buy the other out for 14 days, then the other has the same option and then sale etc.). It may also be sensible to put a Declaration of Trust into place to define shares or protect investment into property by parents or other family members.
- Future major purchases: It is helpful to define how these may be paid for, and split, either by contribution or by agreeing not to purchase jointly.
- Businesses: If the cohabitants own a business together, this needs to be sorted out. Often a Shareholders Agreement is a sensible adjunct in such circumstances.
- Debts: These can be controversial and setting out responsibilities and roles is helpful.
- Bank accounts: fewer cohabitants have joint bank accounts these days, but sorting out who will pay for what is sensible. Sorting out who will transfer joint accounts to the other and what happens to the direct debits can make things easier on separation.
- Cars: cohabitants will often share a car, so dealing with ownership, loans and repayments is important.
- Interim arrangements: Any period between separation and sale or transfer of a property can be very difficult for parties to resolve. Setting out those transitional arrangements in an agreement can save an awful lot of emotional strain in the event of separation. Dealing with who will remain in the property and who will contribute towards what is very sensible.
- Children: I am not a huge fan of dealing with child arrangements in a Cohabitation Agreement, as often the parties do not have children upon entering cohabitation. However, agreeing the spirit of arrangements or agreeing to enter into a Parenting Agreement in the event that children come along is positive.
- Terminating events: It is useful to cover off not only what events will terminate the agreement, but also what the parties will then do. Entering into a separation agreement or pre-nuptial agreement is often a next step that can be agreed here.
- Review: It can be helpful to agree to vary the terms of an agreement after the passage of time, or more importantly, in the event of a major change occurring such as the birth of a child or receipt of inheritance etc.
In more recent times, there have been some interesting developments in things that we have seen going into Cohabitation Agreements that are proving to be interesting and engaging for clients, such as:
- Infidelity: These kinds of clauses have been around for a while, but there can be many different interpretations of what people define as infidelity and this can cause problems for cohabitants with different expectations of each other
- Pet clauses: As a nation of animal lovers it is no surprise that cohabitants can fall out over who keeps the family pet in the event of a separation
- Social media: Who says what, to who and when is more important today than ever before. Restricting the use of, what contents should and should not be there and what people say about each other in the event of a separation is becoming increasingly popular.