Cohabitation agreements can be the key to a successful partnership, providing clarity for couples as to how their living arrangements will work on a financial basis. They can also  provide greater certainty as to what will happen to any assets if the relationship fails or one partner dies. Below we answer some frequently asked questions about these types of agreements, from what they can include to how they can safeguard the rights of both parties.

What is a cohabitation agreement?

A cohabitation agreement is a written agreement between two people who have agreed to live together as a couple. This is used to record the financial arrangements between the couple during the period of cohabitation, including their rights and responsibilities in relation to the property in which they reside, or will soon reside, as well as their respective interests in any real or personal property in the event of either separation or death.

This will commonly include the financial rights and liabilities of each partner in relation to their home, whether this be owned outright, mortgaged or rented. It can also include provision in respect of individually or jointly owned assets, such as furniture and vehicles, which may be used by both parties during their period of cohabitation, but to be retained by just one partner if the couple separate, or to form part of one partner’s estate on death.

What are the benefits of a cohabitation agreement?

The rights of a cohabiting couple, regardless of how long they have lived together, differ significantly to those of the married couple, especially on the breakdown of a relationship or when one person dies leaving a surviving partner behind. As such, by documenting the rights and responsibilities of each party within a cohabitation agreement, and determining in advance their respective legal and beneficial interests in any assets, this can help to avoid any disagreements, or even costly litigation, if they go their separate ways or one person dies.

These type of agreements are a way of clearly recording the couple’s intentions about ownership of their property when they decide to live together, as well as the division of assets on either separation or death, providing the couple with the flexibility and freedom to organise their financial affairs as they wish both during and following cohabitation.

What are the drawbacks of a cohabitation agreement?

Cohabitation agreements can be complex documents, including various detailed and carefully worded provisions. To be enforceable, these agreements must be adequately drafted, and signed and witnessed, to help avoid any claims of fraud, duress or illegality. This will usually involve a cost to the parties. The cohabiting couple should also each consider making a will, in conjunction with any cohabitation agreement, to ensure that any individual or jointly owned assets are distributed in accordance with their wishes after they die.

Still, the benefits of putting in place a well-drafted cohabitation agreement, together with a last will and testament, especially in minimising the risk of any future litigation, will often outweigh any initial outlay. In this way, couples can provide each other with peace of mind that suitable provision has been made for every eventuality.

When can a cohabitation agreement be drawn up?

There is no hard and fast rule as to when two people should enter into a cohabitation agreement. An agreement can be put in place either prior to a couple living together or, alternatively, to regularise their financial arrangements at any time after they have moved in.

That said, if you are planning to buy a property together or take out a tenancy on a joint basis, it is advisable to have a cohabitation agreement in place prior to completion or signing, clearly recording your intentions from the outset. It is also best to seek expert legal advice on the provisions of any agreement, ensuring you cover all aspects of your finances and your future.

Legal disclaimer 

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such.

Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.