A cohabitation agreement may not sound like a recipe for romance. However, it is a widely held belief that a couple who live together, have children and own their home together, have the same legal protections as a married couple; this is not the case. Contrary to popular belief, there is no such thing as a ‘common law spouse’ under English law.
Couples who choose to cohabit can protect their interests if their relationship goes pear-shaped by having a clear, concise cohabitation agreement in place. Such a document can set out how assets are to be divided if the relationship ends.
What legal rights do cohabitees have?
Cohabitees are not entitled to the same legal rights as married couples. In the event of marriage dissolution, spouses have the legal right to go to court and ask for a financial order which can include spousal maintenance. The court will consider several factors, laid out in the Matrimonial Causes Act 1973, section 25 and divide the relationship assets as fairly as possible.
However, couples in cohabiting relationship do not enjoy similar protection under the law. family law in the UK provides recourse for a cohabitee to claim maintenance even in cases where one partner has always supported the other financially. Likewise, there is no legal right to claim a share of the family home if it is owned by the other partner (even if the mortgage or other payments have been contributed to by the partner whose name is not on the title).
What is a cohabitation agreement?
A cohabitation agreement, which has been colloquially referred to as a “no nup” or “living together agreement,” allows cohabitees to set out how their assets will be divided if the relationship breaks down. The agreement may include how you plan to divide up the house, contents, savings, and any other assets owned jointly such as cars. There are many other common inclusions, such as arrangements for child support and debts. Couples can also outline in the agreement how they will divide up paying for rent, and household bills whilst they are living together.
What is the process for setting up a cohabitation agreement?
If you choose to draw up a cohabitation agreement, you and your partner can decide for yourselves what sort of terms you want to include. One of you can then go to a family solicitor to have the agreement drawn up. Your solicitor will advise you of the implications of the agreement and suggest other terms which you and your partner may not have thought to include. The other partner will then have their own lawyer review the agreement as it is imperative that both partners receive independent legal advice. Once you’ve both signed on the dotted line, the agreement operates as a contract which the court may enforce if necessary.
Trusts of Land and Appointment of Trustees Act 1996
There are two main ways in which cohabitants may have an interest in property: as a joint owner or, where the property is in the sole ownership of the other cohabitant, under a trust, whether express or otherwise.
Joint owners may own property as either:
- Joint tenants – both parties own the 100% of the property equally. If one of the parties dies, their share automatically passes onto the other joint tenant.
- Tenants in common – the owners of the property own distinct shares, and these may not necessarily be equal.
Property disputes are most likely to develop where the family home is owned in the name of one cohabitant. If a couple cannot reach an agreement as to how the equity in a former family home should be divided, they may bring an application under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA 1996). Under s14 of that Act, an application may be made by a trustee of land or a beneficiary with an interest in property subject to a trust of land.
The important thing to establish is that you have a beneficial interest in the property, which in other words means you are an unnamed owner. This can be shown using evidence that you and your former partner intended to be joint owners or jointly share in the proceeds of the home. If there is no evidence of an express agreement, you can show a common intention through other means, for example, that you contributed financially in the form of a contribution to the deposit or purchase price, mortgage payments, or improvements and/or your partner promised you a share of the property. This is called a “constructive trust,” which is similar to the sort of trust you would have a lawyer set up, but the court declares its existence in the absence of formal documentation. Overall, this is what you need to prove:
- There was a common intention for you to have a beneficial interest in the property, and that you have relied on this to your detriment (i.e. you have arranged your finances on the basis that you are an owner of the home)
- You would suffer financial loss if your interest was not declared
- It would be unreasonable for the court not to declare your interest
If you can prove all three aspects, the court has the power to grant you a share of the home.
The court can then make orders as to who can continue to live in the home and shoulders responsibility for household bills, and can order the person remaining in the home to pay compensation to the other. The court can also make an order that the home is to be sold.
Claims under TOLATA 1996 can be extremely complex; therefore, it is crucial to obtain advice and representation from an experienced family solicitor.
The Cohabitation Rights Bill 2017-19: a way forward?
In June 2014, Lord Jonathan Marks sought to address the lack of law in this area and introduced the Cohabitation Rights Bill, which provides basic protections for cohabitants and for the provision of their property upon death.
The key principle of the new Bill is to allow cohabitees who have lived together for two or more years to apply to the court for a financial settlement order if they separate.
However, the Cohabitation Rights Bill does not extend to cohabitees the same legal rights and protections granted to couples who are married or in civil partnerships. Under the Bill, the court can make a financial settlement order where there is a ‘retained benefit’ or an ‘economic disadvantage’ dependent on any ‘qualifying contributions’ made – either financial or other.
The progress of this Bill through Parliament is painfully slow, and it is not likely to be passed anytime soon. Therefore, couples planning to move in together should protect their interests by entering into a Cohabitation Agreement drafted by an experienced family solicitor.
OTS Solicitors is a respected Immigration and family law firm in London and is highly recommended by the Legal 500. By making an appointment with one of our family solicitors, you can be assured of receiving some of the best legal advice available in the UK today. Please contact us on 0203 959 9123.
Posted on: Monday, 05 March, 2018