Have you moved in with a partner during lockdown? Do you need a cohabitation agreement?

Cohabiting couple families have been the fasted growing type of family over the last 20 years with over 3.5 million of them in the UK.

The 2020-2021 stamp duty holiday saw the housing market go into a frenzy with more cohabiting couples buying houses together than ever. In the rush to take advantage of the stamp duty holiday many cohabiting couples may only now be considering the legal impact of owning property with a partner. Moving in with a partner is an exciting time but it is vital that couples consider the legal consequences should their relationship break down.

Despite ancient myths there is no such thing as a common law marriage and there are no automatic claims that can be made if the relationship breaks down. The legal position is significantly different to that of a married couple. The law simply acts to declare interests in property and finances unlike the possibility of redistributing assets when it comes to divorce.

So what can be done to avoid later disputes?

Declaration of Trust

A declaration of trust can be used where a property is owned as tenants in common to record the proportions in which the property is held. For example, if one person pays more of the deposit or pays more towards the mortgage each month this can be recorded so that on the breakdown of the relationship the property is divided proportionately. This can also be useful where one person pays for home improvements e.g. buys a new kitchen for the property as this can be recorded in the declaration of trust. However, the proportionately of the property is not enough for some couples, most will require an agreement to govern day-to-day matters. This is where cohabitation agreements become useful.

Cohabitation Agreement

A cohabitation agreement is usually the more favourable option for unmarried couples living together as this can be used regardless of whether the couple own the property jointly or one is the sole owner. A cohabitation agreement is more comprehensive in that it goes into detail on what actually happens when the relationship breaks down. This can include: who pays the mortgage and bills and whether the property is to be sold or whether one of the couple is to stay living in the property etc. There are many things to consider when it comes to a cohabitation agreement including:

Things to consider

– On separation should the property be sold or transferred to one of the parties?

– Who will pay the mortgage and bills?

– What will happen to any joint finance plans?

– How will furniture and contents be divided?

– How will a joint bank account operate?

– Wills and estate planning

Are they legally binding?

A declaration of trust will be legally binding if executed correctly as a deed. A cohabitation agreement will be a legally binding contract if all formalities are complied with and so it is vital that legal advice is obtained prior to entering into either of these legal documents.

If you are part of a cohabiting couple but have yet to consider legal protections should your relationship break down, you should seek legal advice from a family law specialist. You can contact our family law team on 0845 287 0939, by email, or through the chat button below.