The importance of Cohabitation agreements for unmarried couples:

Cohabitants are treated differently from married couples, in particular when it comes to their property rights, their rights in relation to children and their rights on death.

The Family Law Act defines cohabitants as two people who are neither married to each other nor civil partners of each other but are living together as husband and wife.

Unlike married couples, there is no one statute that governs the division of financial interest in property when cohabiting couples separate. There is no such thing as “common law husband and wife”.

In order to make a claim against property that you and your former partner have lived in, you have to establish a beneficial interest. There are a number of ways in which you can prove this:

  1. Where the property is in your joint names if there is an express declaration of ownership, this is conclusive. The declaration can state whether the ownership is on a 50:50 basis or some other combination of shares.

  • If there is no express declaration, the court can imply a constructive trust and the starting point in jointly owned properties will be 50:50

  • If there is no express declaration, the court can look at who contributed what and allocate beneficial ownership accordingly. This is called a resulting trust. Contributions can either be paying the deposit or being a party to the mortgage.

2. Where the property is in the sole name of one of the parties, if it was bought as a joint home, the court will look at the common intention between both parties before the property was bought.

  • Again, the court can imply a constructive trust based on that common intention.

  • The court can look at who contributed what and allocate the beneficial ownership accordingly. This is called a resulting trust. Again contributions can either be paying the deposit or being a party to the mortgage.

3. Where the property is in the sole name of one of the parties, the court has the discretion to award the other person a range of interests or rights under the doctrine of proprietary estoppel. These rights can include granting a beneficial interest, granting a sum of money or granting somebody the right to live in the property for a specified time. This doctrine can arise if:

  • The non-owner mistakenly believes that he or she has a right in the property and does something to their detriment as a result of believing that they have a right in the property eg. paying for works on the property which increases its value.

  • The owner knows that his or her partner mistakenly believes they have a right and,

  • The owner either encourages his or her partner to act to their detriment (for example spending money on the property) or indirectly by not stating their ownership.

It is a fact of modern life that many couples choose to live with their partners rather than get married or enter into a civil partnership. It is so important to consider how your assets and any assets you acquire during your relationship will be affected. Ideally, you should decide this before you co-habit. One particular aspect that will need to be addressed is what would happen if you have children.

At Prince Evans we can help you to reflect your arrangements in a Cohabitation Agreement. Although English law does not formally recognise cohabitation agreements there is no reason, in principle, why the courts should not uphold such an agreement.

In order to give a cohabitation agreement the best possible chance of being upheld by the court in the event of a future dispute, the following points should be taken into account:

  • Both parties must recognise that they intend to create a legally binding document

  • Neither party should feel pressured into entering the agreement, it must be voluntary and of your own free will

  • Both of you need to be separately and independently advised by a lawyer

  • If the reasons for entering into an agreement are intended to avoid litigation under any future legislation that gives cohabitees the right to apply for financial provision, there should be full, frank and honest disclosure of your respective assets and liabilities.

  • Again, if the reasons for entering into an agreement are intended to avoid litigation under any future legislation that gives cohabitees the right to apply for financial provision, the agreement must be fair. What is fair after a short period of cohabitation with no children will not necessarily be fair after many years of living together and with a family to consider.

In addition to the cohabitation agreement a cohabiting couple’s respective interests in a property should be reflected in the documents of the title to the property and/or a deed of trust.

In the event of a dispute following a couples separation ie. where a separated couple cannot agree their respective beneficial shares in a property, an application to court can be made under the Trusts of Land and Appointment Act 1996 (commonly referred to as TOLATA). In such cases the court will consider the intentions of the person who created the trust. It is for this reason that recording what was agreed in detail either in a cohabitation agreement or a Trust Deed, is very important.