Family Law, Divorce, Separation
When married couples divorce there are specific laws to determine how property and finances are shared. When couples who live together decide to separate there is no legal framework to refer to if you disagree about property ownership, finances or children. Drawing up a cohabitation agreement could save you both from unnecessary heartache and financial turmoil in the long run.
If you are renting, the landlord should be informed and you should consider adding both of your names to the lease. If the lease is only in your partner’s name, you may find yourself with no legal right to stay there or to receive your share of the deposit unless this has been agreed in writing.
If you move into a property that your partner owns, particular care needs to be taken to protect your positions as strict property laws will apply which dictate that property is owned by the person whose name is on the ownership title documents. Without a cohabitation agreement, even if you make contributions to the mortgage or pay towards the bills, you will not own or have any right to stay in the property if the relationship breaks down and your partner asks you to leave.
The only exception to this is if there are children involved, then you can apply to the court to be allowed to live in the property until the children reach the age of 18 or leave home, whichever is the sooner.
If you decide to buy a home together, there are added complications if you are not married. You will need to decide how you are going to own the home from the outset and consider what you will do if you split up, or one of you is unable to work and pay their share of the mortgage. Unless you have an agreement to the contrary, you will only be entitled to a 50 per cent share of the equity in the property even if your contributions to the mortgage were higher.
There may be other things to think about. If you have bought the house with the financial help from parents, will they expect to be repaid? If you have taken advantage of a shared ownership scheme to buy your home, you will need to clarify the exit strategy.
If you do bring assets into the relationship like savings, cars and valuables, then it may be important to protect your ownership of them via an agreement.
As time goes on, and you begin to build a home of joint belongings, be it flat-pack furniture or fine antiques, the lines of ownership can get blurred. It is not always clear who bought what, or whether it was a gift from one party to another. Virtual assets like e-books, music, films and games can represent a substantial investment over time and may be harder to separate than a box of CDs.
With a cohabitation agreement you could also clarify the contribution of each person to the daily household finances such as rent, mortgage, bills and insurance premiums. Consider how you will fund the purchase and own bigger assets such as cars and manage your bank accounts. If you build up savings, how will they be divided if you part company?
In today’s market, extra caution should be paid to any joint credit agreements and loans as you could find your credit reference adversely affected by your partner’s actions.
You may also need to consider how you will pay your outgoings if one of you has an accident and cannot work, or becomes unemployed. If you are financially dependent on each other and you are considering taking out life insurance policies including critical illness cover, you should explore the options about ownership and who will be entitled to a payout before signing up.
Unlike married couples who can turn to the divorce courts for help, if living together does not work out you will have to sort it out yourselves. A cohabitation agreement will help you to avoid unnecessary financial distress at an upsetting time.