For many couples, moving in together is an exciting step in their relationship. However, when you’re unmarried and one partner owns the property while the other simply moves in, this arrangement can bring up important legal and financial questions. Without a marriage or civil partnership to offer legal protection, it’s crucial to have clear agreements in place regarding property rights, financial contributions, and what will happen if the relationship ends.
Creating a cohabitation agreement provides peace of mind by ensuring that both partners have clear expectations. Not only does it protect your financial interests, but it also helps avoid potential conflicts in the future by clearly outlining each person’s rights and responsibilities. This clarity can provide a foundation for a stronger relationship, knowing that both partners’ interests are safeguarded.
A cohabitation agreement provides a way for unmarried couples to outline the terms of their living arrangement, ensuring that both parties’ interests are protected. This blog will guide you through the key considerations, legal requirements, and best practices for drafting a cohabitation agreement, helping you navigate the complexities of moving in together without the formalities of marriage.
Key Considerations for Drafting a Cohabitation Agreement
Legal Requirements and Deeds of Trust
For any shared property, you should consider executing a deed of trust in addition to a cohabitation agreement. A trust deed is an official document used when one partner legally owns the property, but the other has a share of it, even if not on paper. This is often the case when partners are joint legal owners in equal or unequal shares.
Cohabitation agreements should meet the standard requirements of any contract: offer, acceptance, consideration, and an intention to create legal relations. In addition to these standard requirements, there are specific considerations that apply uniquely to cohabitation agreements:
- Consideration and Deeds: To avoid issues proving that consideration (what one party gives in exchange) was granted, it’s advisable to execute the agreement as a deed. This helps clarify any compensation or exchange between the parties.
- Intention to Establish Legal Relations: Make it clear in the agreement that both you and your partner want to establish legal obligations.
- Third-Party Approval: Avoid imposing responsibilities on any third party without their express consent.
- Court Authority: It’s important to acknowledge that while you can set out many terms in the agreement, the court retains ultimate authority in certain matters, particularly regarding financial provisions. Any attempt to limit this authority may be deemed unenforceable.
Make your intentions clear in every clause of the agreement. Set all deadlines and important dates in an easily identifiable manner. If payments are involved, index them appropriately, and carefully consider how to assess changes in value over time. Including a severance clause, such as the following, is a prudent measure:
“The invalidity or unenforceability of any provision of this agreement will not affect the validity or enforceability of any other provision of this agreement. Any invalid or unenforceable provision will be severable.”
Practical Steps for Drafting the Agreement
While cohabitation agreements have little legislative or judicial supervision, best practices should still be applied, similar to prenuptial agreements. Consider the following:
- Independent Legal Advice: Ensure that both parties receive independent legal advice to fully understand the potential consequences of the agreement.
- Full Financial Disclosure: Exchange full and transparent financial disclosures, including schedules that detail your assets and income, supported by relevant documents. The agreement should have an appendix providing a clear financial picture of both parties.
- Review the Agreement Regularly: Revisit the agreement if there is a significant change in circumstances, such as the birth of a child, changes in assets, or either party becoming unable to work. This helps ensure that the agreement remains fair and relevant.
- Child Provisions: Include provisions for any children you have or might have together, specifying how they will be provided for.
- Pressure and Fair Bargaining: Agreements formed under significant emotional or financial pressure are at risk of being disregarded by courts. Be aware of your bargaining positions and any outside influences.
Example Scenario
For instance, imagine a couple who jointly purchased a home, but one partner contributed significantly more to the down payment. Without a clear agreement, this could lead to disputes over ownership shares if the relationship ends. A cohabitation agreement can clarify how the home would be divided, protecting both parties from unnecessary legal battles.
Checklist: Key Points to Include in Your Cohabitation Agreement
- Independent Legal Advice: Both parties should obtain independent legal advice to fully understand the agreement’s implications.
- Full Financial Disclosure: Share comprehensive financial information, supported by documentation, to ensure transparency.
- Regular Reviews: Revisit the agreement periodically, especially after major life changes (e.g., the birth of a child or significant financial shifts).
- Provisions for Children: Include specific clauses for the care and financial responsibility of any children involved.
- Severance Clause: Add a severance clause to ensure that if one provision is invalid, the rest of the agreement remains enforceable.
Oral Agreements: Risks and Recommendations
A cohabitation contract may be formed orally, as long as it doesn’t pertain to land or property interests. However, oral agreements often lead to disputes, as the parties’ intentions are harder to prove. To avoid such issues, it’s always recommended to formally document the agreement in writing whenever possible.
In particular, if the agreement involves property, it must comply with the Law of Property Act 1925, which requires the agreement to be in writing. If there’s any uncertainty regarding consideration (what one party gives in exchange), it’s wise to execute the agreement as a deed. This not only adds clarity but also ensures the enforceability of the agreement in case of disputes.
Conclusion
Receiving or drafting a cohabitation agreement can have a lasting impact on your relationship and future financial security. Whether you’re planning to move in with your partner or seeking to formalise existing arrangements, having a clear and legally binding cohabitation agreement is essential. At Aristone Solicitors, we specialise in guiding individuals and couples through this process with precision and care.
If you need assistance with drafting a cohabitation agreement or have any questions about your legal rights, don’t hesitate to contact us today:
- Luton, dial +441582 383 888.
- London, dial +442034 393 888.
- St Albans, dial +441727 519 888.
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