"What a lot of people dont understand is that, depending how the mortgage and bills are split and paid, the partner who doesnt own the home could be building a share of the equity in the property."
The next step: why couples might consider a cohabitation agreement
Moving in together is a big step for relationships. As couples make the decision and commitment to a build a future together in a home of their own, there is a new level of affection; the shared responsibility of paying bills, picking out new furniture and generally a closeness not yet experienced.
Georgina Rayment, head of family law at Ipswich-based lawyers Prettys, believes your head should play as big a role as your heart when you commit to a partner and says that a cohabitation agreement – the equivalent of a ‘prenup’ for the unmarried – can offer protection for both individuals as they enter the next stage of their relationship.
As the law currently does not protect cohabitees to the same extent as spouses. Lack of clarity about finances during the relationship can therefore sometimes lead to legal outcomes that may feel unfair to one half of the couple.
A cohabitation agreement is signed by both partners and usually relates to financial issues such as mortgages and running the home. It is not legally binding but is often taken into consideration if a later separation is unfortunately followed by legal proceedings.
Georgina gave us five key benefits to why couples might consider opting for such an agreement as they look to move in together:
1. Be clear on who is contributing what to the household
New relationships are wonderful. You squeeze in as much time together as possible and it’s only natural that a lot of that is in each other’s homes.
To all intents and purposes, you’re already living together before you settle on which home suits you best as a couple and anything is made ‘official’.
Georgina said: “What a lot of people don’t understand is that, depending how the mortgage and bills are split and paid, the partner who doesn’t own the home could be building a share of the equity in the property.
“If a couple ends up separating, the homeowner could find their ex has a claim to a share of the equity – and the property may ultimately have to be sold. Having a cohabitation agreement removes this uncertainty and leaves everyone clear on who is paying what and where they each stand.”
2. They encourage honest conversations between couples
“If you decide to take the plunge and move in together, a cohabitation agreement gives both sides the opportunity to have a positive, honest conversation about how the bills will be paid, which is a solid start to any long-term relationship.”
If people have ‘drifted’ into living together, the person who does not own the house but is financially contributing should spark the conversation. Do not assume that contribution equals legal entitlement. If you are buying together in unequal proportions, discuss whether you are each expecting to recover those proportions if you later separate. This may be difficult without comprehensive documentation in place.
3. Cohabitation agreements avoid conflict further down the line
“Often when a relationship comes to an end all good intentions can be lost in the heat of emotion. Having an agreement in place at the start is practical so can help avoid that.”
Once signed, you can file the agreement away and get on with your life. It just means you have something to refer back to later in case of any split. Providing there has been no misrepresentation or coercion and everyone understands their rights, an agreement is more likely to hold weight if it is needed in court.
4. An agreement removes any vagueness from financial responsibilities
It will illustrate that significant financial contributions are being made by both parties on matters such as the mortgage, utility bills or other big outgoings like a new boiler or a conservatory.
“The person paying is then making an informed decision that they are each to invest into the property in certain ways.
“An agreement will eradicate any vagueness and properly record where the money is going and whether it gives an interest in the property.”
5. They can be reviewed at any time
“Agreements should be regularly reviewed in case of life-changing events, such as having a child,” said Georgina.
Although cohabitation agreements can often seem almost business-like, this view is likely to be softened where a child is involved. Georgina warns that there can often be a misunderstanding over who gets the house in any split involving children of unmarried parents.
Falling ill or being made redundant can be other reasons for a review. If you marry or have a civil partnership, draw up a pre-nuptial agreement if you want your arrangements to continue after the happy day.
Georgina concluded: “We understand that sometimes it can be difficult to bring up conversations like this when you are in the first phases of your relationship, however a cohabitation agreement is a positive step to underline a couple’s commitment to each other and give them a feeling of security for the future.”