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How to prepare a Cohabitation Agreement

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When a couple buys a home in their joint names but makes unequal contributions to the cost of acquisition, this is a typical situation in which a cohabitation agreement may be entered into. In that case, a cohabitation agreement can effectively ringfence their individual contributions in the event of a breakup. There is no “one size fits all” solution; rather, such agreements are personalised, suited to the specific circumstances of the partnership, and can handle a wide range of issues.

The likelihood that such an Agreement will be regarded as a legally binding contract increases if it is expressed in writing, properly executed, and witnessed. No “cooling off time” exists.

Regardless of any future changes in the parties’ circumstances, binding agreements may be extraordinarily difficult (or even impossible) to modify or set aside due to their very nature. Therefore, it is wise for parties contemplating such agreements to obtain thorough legal counsel to ensure that they are confident, before signing, that the agreement achieves its intended goals. While each agreement will be customised for the particular set of circumstances, there are several clauses that might be worth taking into account in every situation.

What should be stated in a cohabitation agreement legally?

1. The impact of marriage or civil union

When a couple separates, spouses and civil partners have access to a far larger variety of claims than cohabitators. Before committing to a cohabitation agreement, it is wise to think about whether or not the provisions should still apply in the event of marriage or a civil partnership. Cohabitants may think about signing a pre-nuptial agreement if they plan to get married so that their wishes regarding certain assets are recorded clearly.

2. Giving up additional claims

If a cohabitation relationship ends, the cohabitant has the right to pursue financial compensation. The ability to bring such claims is something that parties may be able to limit with a well-written cohabitation agreement. It is crucial for parties to understand whether a cohabitation agreement just covers one specific scenario, such as the purchase of a home in joint names, and prevents them from asserting any financial claims. If it does, this could have expensive repercussions.

3. After-death tying

The estate of a deceased person will not necessarily be able to enforce a cohabitation agreement. The Agreement must expressly state whether the parties wish for the Agreement to remain in effect after death. If something is left out, the cohabitant might not get the results they wanted.

4. Change of Circumstances

A Cohabitation Agreement will bind parties to the terms and there is no legislative provision that allows courts to automatically overturn agreements in the event of a change in either party’s circumstances. This means that if such an agreement is drafted to provide, for example, a generous monthly maintenance payment to one cohabitant, and the relationship breaks down, the payer may be bound by the maintenance clause indefinitely if there is no express provision that this would cease to apply.

Cohabitation Agreements are a practical tool that can give both spouses the assurance that their financial interests are protected. However, there are countless instances in which a cohabitation agreement can go awry. Even if cohabitants write their agreement with the greatest of intentions, they may still be caught off guard by the unexpected, especially if there are complicated problems at stake. Getting legal counsel before establishing an agreement is probably a wise financial decision. A poorly understood agreement might cost hundreds of pounds to get into, not to mention cause endless nights of insomnia.