Cohabitation Agreements

• If you are buying a property with a partner, friend, or family member.
• If you already own a property and your partner, friend or family member is moving in.
• If you are already living together and want to formalise your ownership or other financial arrangements.
• If you are making unequal contributions to a property purchase.
• If you want to provide financial security for each other from your estates upon death.
• If you want to provide financial security for your children or certainty surrounding their education.

A cohabitation agreement will record your legal and beneficial interests in your property and will set out how the property will be dealt with should you separate. For example, will it have to be sold and how will the sale proceeds be divided, or will one of you have the option to buy the other out? Other clauses you may want to include in your agreement:

• What property will remain your separate property and what property is or will become joint property?
• How will gifts made between you be treated or gifts you receive from others?
• How will inheritances or unexpected good fortune be treated?
• Will you open a joint household account or any other joint bank or building society accounts, and if so, how will they be operated?
• What arrangements will you make for any current or future debts?
• How will you deal with the payment of household expenses?
• What arrangements do you want to put in place in the event of a sale?
• Do you want to put in place any financial support for one another during your cohabitation or in the event of it ending?
• Do you want to put in place any financial support for children during your cohabitation or in the event of it ending?
• Do you want to put in place any arrangement for pets during your cohabitation or in the event of it ending?
• Do you want to put in place arrangements in the event of death and nominations for pension and death in service benefits or life insurance?
• What arrangements do you want to put in place to review your agreement?
• What arrangements do you want to put in place if there are replacement or additional homes?
• What events will bring the agreement to an end?

Protection against claims
A cohabitation agreement will clearly declare the legal and beneficial interests in a property and avoid potential claims and costly litigation. The agreement can also record whether there is to be a sale or transfer of the property in the event of a separation and allow you to map out how this will happen. This can avoid disputes and need for costly litigation.

In the absence of fraud, mistake, or undue influence an express declaration of trust in a cohabitation agreement will be conclusive of the beneficial interests in a property. If there is no express declaration the court can be asked to declare what the party’s beneficial interests are. If it is not possible to ascertain the extent of the beneficial interests by direct evidence the court may either ‘infer’ the parties’ shared intentions in relation to the property in the light of their whole course of conduct in relation to it or ‘impute’ an intention. The court will assess the fair share having regard to the whole course of dealing between the parties in relation to the property.

A cohabitation agreement will also reduce the risks of a claim for proprietary estoppel. This arises from the courts’ equitable jurisdiction to ‘adjust’ rights over property if the assertion of strict legal rights is found to be unconscionable. It arises most commonly where a property owner encourages the other party to act to their detriment in the belief that they will obtain an interest in the property.

Financial security
A cohabitation agreement will enable you to make financial provision for one another or your children in a way that would not be required by law.

Protecting family interests and inheritance
A cohabitation agreement can ensure that the interests of you and your wider family are safeguarded, particularly if family businesses, trusts or inherited assets or family gifts are involved.

Reduces stress and uncertainty
A written agreement clearly setting out what is to happen if you separate will help reduce stress and anxiety at a difficult time in your life.

Discussing a cohabitation agreement can be seen as unromantic or a lack of confidence in the relationship. There may also be pressure from wider family members to consider. The preparation of a cohabitation agreement can however be used as an opportunity to lay the foundations for a strong and secure relationship. They provide an opportunity to discuss any challenges you face now or foresee becoming challenges in the future and will help minimise the potential for conflict during your relationship.