Property Matters: Cohabitation

Stuart Durrant, Conveyancing Partner at Gardner Leader LLP, examines how couples should safeguard their interests in a property if they are not married or have a civil partnership.

When a couple buys a property and one puts more money into the pot than the other, I usually advise that they enter into a Declaration of Trust. Put simply, this records who put what into the property at the start (and who gets what out when the property is sold).

It is an entirely different situation where one person pays for the whole property and, either at the time of purchase or at a later date, a partner moves in with them. This arrangement may be short or it can last many years, even decades – but the question arises, does the non-owning party get any rights in the property (and usually how can this be prevented!)?

There are millions of cohabiting couples living together in England. They and their families have significantly fewer rights and responsibilities than people who are married or who have formed a civil partnership. The problem is that many of them only find this out when it is too late, such as when their relationship has broken down or when their partner has died.

People frequently refer to their other half as a common-law wife or husband. In England, a 'common-law spouse' has no special legal status: you are either married, or you are not.

• One of you might be the sole owner of the home, and not want the other to have a share in it. The non-owner would normally have no rights to remain in the home if asked to leave by the owner.
• One of you might be the sole owner of the home, but now want the other to have a share in it.

One way that cohabitants can protect their best interests is to create a Cohabitation Agreement. This may be used to set out the main financial arrangements that govern the couple’s relationship and, by doing so, they may avoid court proceedings should a dispute arise.

A Cohabitation Agreement has two main purposes:

1. It will decide how the cohabitants will live together on a day-to-day basis covering issues such as the payment of bills (electric, water, food mortgage etc), the ownership of the home and the ownership of joint and individual assets.

2. If a cohabiting couple split up, it will help to ensure that it is as amicable as possible by setting out who will be responsible for the payment of what and who will be entitled to which assets. By making such arrangements, this ensures that the interests of both parties are protected.

An informal Cohabitation Agreement will almost certainly not be legally binding.

Preparing a formal agreement provides a useful framework for making sure that you give serious thought to all the areas that need to be addressed.

A Cohabitation Agreement is a contract between the two of you. To be legally enforceable, the agreement must have been made with the intention of having legal force - the agreement itself can say so. The document should use specific language to make it clear what you are agreeing. It must also be 'executed as a deed', signed in the presence of witnesses.

Even so, a Cohabitation Agreement may not enforceable if it is unfair. To maximise the chances that the agreement is enforceable, both you and your partner should take independent legal advice. You must also be open and honest about your individual financial positions when you enter into the agreement.

If you get married, your Cohabitation Agreement might be taken into account by the court if you later divorce.

A better solution is for the Cohabitation Agreement to specifically state that it automatically comes to an end if you get married. If, at that time, you want to have a similar agreement, you can draw up an appropriate pre-nuptial agreement.

Although in the past the courts have occasionally found a way to give the non-owning party an interest in the property, it is now almost impossible to achieve this without a formal agreement being in place.

Therefore, if you, as the property owner do not want your partner to gain an  interest in your property; or you, as the non-owning person, want to safeguard a promised interest in the property, the only sure way is to seek legal advice and enter into a formal agreement.

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