As specialist family law solicitors, we get to deal with the fallout when a cohabiting couple separates and can’t reach an agreement over whether their family home should be sold, or how the equity should be split, or whether the house should be transferred to one of them.
Court proceedings over property ownership can be protracted and expensive as the court assesses property and trust rights. Potentially your family law solicitors have to go back years to gather evidence on who paid the deposit, mortgage, or contributed to the house renovation costs. This hassle and cost may be avoided if you sign a cohabitation agreement.
When do you need a cohabitation agreement?
Most people think you only need a cohabitation agreement if you are buying a family home with a partner. That’s not the case. You need a cohabitation agreement in a range of different circumstances, such as:
- Buying a house in your sole name but your partner intends to live with you at your house
- You own a house and your partner is moving in with you
- You jointly own a house with your partner but your personal or financial circumstances are changing. For example, you have inherited some money and intend to pay the mortgage off with your inheritance
- You are going to jointly buy a property with your partner and you are contributing different amounts of money towards the deposit, or one of you is getting money from family to pay the deposit, or one of you will be paying all or a larger percentage of the mortgage and household bills
There are many other reasons why a couple may need a cohabitation agreement. That is why, if you are thinking of buying a property or you have formed a new relationship, it is sensible to ask the question ‘do I need a cohabitation agreement?’ and to get the question answered by an expert family solicitor.
You may think that a family solicitor is trying to sell you something that you don’t really need as most people don’t realise (until it is too late) that if your partner moves into your house, they have a potential claim over the property under property or trust law even though their name is not on the title deeds. Equally, if you have been in an unmarried relationship for many years, you may have no rights to a share in the equity in your partner’s property because of the complexities of property and trust law.
You might also be interested in
What goes into a cohabitation agreement?
A cohabitation agreement can be as broad or as detailed as you chose. If a partner is moving into your house your agreement could say that your partner will not have a beneficial interest in your property even if they contribute to the mortgage or renovation costs unless you sign another cohabitation agreement setting out their interest in your property. That type of cohabitation agreement minimises the risk of your partner claiming they have a beneficial interest in the property because you took money off them as rent and payment towards household bills but, after you split up, your ex alleges their monthly contribution paid towards the mortgage so they have a claim over the equity in the property.
If you are buying a property jointly with your unmarried partner then your cohabitation agreement could record the detail of who paid the deposit, how the mortgage payments will be split, and other details, so you avoid having to get information and paperwork many years later to prove you paid the majority of the deposit and mortgage or to try and prove that it was agreed that you would get 70% of the equity because it was your inheritance from your grandmother that enabled you to pay the deposit and stamp duty.
It pays for an expert family solicitor to talk to you about your options and to prepare a bespoke cohabitation agreement for you. Most people assume that a cohabitation agreement has to be a standard document but it can be created to meet your relationship and property needs and be as straightforward or as complicated as you want to make it.
Can a cohabitation agreement be changed?
Some couples are reluctant to sign a cohabitation agreement because they think that circumstances may change. For example, if your partner is moving into your house the initial intention may be that the house will remain yours but that may change over time if you want to renovate or extend the property. Alternatively, once your relationship is established you may want your partner to share the mortgage payments with you, whilst still wanting to protect the equity that you built up in the property before your partner moved in with you.
Cohabitation agreements can be changed as your relationship develops or circumstances change but it is essential to record your revised agreement in a new document. That’s because most cohabitation agreements say any verbal promises or assurances will not carry any weight and any changes to your original agreement must be in a deed. A signed agreement avoids expensive court proceedings over whether conversations occurred, whether you really intended to give your partner an increased beneficial or property interest, or whether your partner misinterpreted your conversation or twisted it to their advantage.
If I don’t sign a cohabitation agreement, is the jointly owned house half mine?
The house isn’t necessarily half yours if you don’t sign a cohabitation agreement. It all depends on how the house was legally purchased (was the family home bought as joint tenants or tenants in common) and what your intentions were. Not having a cohabitation agreement can result in expensive court proceedings if one partner decides they want to claim half the house when they didn’t pay half towards the deposit or if one partner wants more than half the equity in the family home because they paid for the extension or for the new bathroom. A cohabitation agreement will cover who gets what percentage of equity in the house if it has to be sold. A bespoke agreement can also cater for one partner paying for renovations or paying off the mortgage.
Key points on a cohabitation agreement
Even if a house, investment, or business asset is owned by one partner, the other party to the relationship can still make a property or financial claim based on verbal or written promises, trust, and property law. The cost, risks, and inherent uncertainty of court litigation can be avoided, or significantly reduced, by a cohabitation agreement.