6 reasons to have a cohabitation agreement

Moving in together marks a significant milestone in any relationship. Whether you are sharing a home that one of you owns, or embarking on renting or buying a place together, it signifies a commitment that intertwines both financial and emotional aspects. Most couples normally enter into cohabitation without any formal agreement.

Avoid the Pitfalls of a "Common Law Marriage"

You might assume that being in a long-term cohabiting relationship of 20 years or more grants you the same legal rights as married couples or civil partners.

This statement is inaccurate and a misconception. The legal notion of a ‘common law marriage’ does not exist, and irrespective of the relationship duration, unmarried couples living together do not have any legal financial responsibilities towards each other in case of a separation.

Potential challenges may arise, such as deciding:

• If you have purchased a home together deciding who will live at the property and who will leave
• If you have a joint tenancy together, deciding the transfer of the tenancy to the person who remains living in the home
• Considering whether one party should pay occupational rent to the other
• Planning how to manage the payment of ongoing school fees

Getting clear on your legal standing

There is no automatic 50/50 split in any situation. Since there is no standardized law that addresses the separation of cohabiting couples like it does for married couples or civil partners, having a cohabitation agreement can provide clarity on your rights in case of a split.

Entering into a cohabitation agreement allows you to formalise the living arrangements and confirm any financial contributions made and responsibilities each party has; for example, paying the deposit on the purchase of a home or paying the mortgage/rent and bills.  A cohabitation agreement will confirm each party’s interest in the property and what will happen in the event of a relationship breakdown.

The well-being of children will always be the top priority, and you will be guided on the legal framework in place to ensure their welfare is maintained.

Safeguarding your owned property

Living together does not always indicate an immediate lifelong commitment or a decision to merge all assets. This concern may be more significant for individuals in the following situations:

• Those who have experienced divorce and have dependents to support
• Properties financed with assistance from family members
• Properties linked to their business, like farms, hotels, or vacation rentals

If your partner moves into your home, which you solely own legally (or with other family members), they may not automatically gain a share of the property. 

A cohabitation agreement serves as a reliable method to protect your assets. It clarifies that your partner won't acquire any legal interest or rights in your property through residency, even if they contribute to bills or the mortgage. In cases where they invest significantly in renovations or enhancements, you can agree that they will be reimbursed if the relationship ends.

On the other hand, you may consider having your partner obtain a stake in your property, particularly if they are assisting with your mortgage payments or making substantial enhancements that enhance its worth.

Ensuring clear payment procedures

In any shared household, it's important to establish clear agreements on financial responsibilities. Make sure to discuss and agree on the specific amounts each person will contribute towards the bills.

This is typically a 50/50 split, but it may vary, particularly if one individual earns considerably more than the other or already possesses the property.

While you may regularly monitor your monthly expenses, having a reference point like a cohabitation agreement can help clarify matters when it comes to paying annual bills such as school fees or renewing insurance policies.

If one of you is unable to work

When an individual is unable to work, a decrease in income can significantly impact a relationship. This situation could be a part of your shared plans, like starting a family, or it could be unexpected, such as caring for an elderly or ill parent, or dealing with an accident or severe illness.

Talking about these scenarios with your lawyer while creating a cohabitation agreement will assist you in preparing for the future and ensuring clarity if such a situation occurs.

Confidence and reassurance

Entering into a cohabitation agreement will undoubtedly bring peace of mind as it helps you organize the logistics of your relationship and clarifies your stance on important matters. This step will save you time and mental energy, enabling you to concentrate on other aspects of your life.

Collaborating with a skilled solicitor to create a cohabitation agreement facilitates addressing challenging issues and planning for potential outcomes if the relationship concludes. The peace of mind provided by a cohabitation agreement is priceless. While you don't need to memorize every detail in the agreement, having a document to refer to can offer solutions to any questions that may arise during the relationship.

How can Hegarty help?

It's always a good time to consider a cohabitation agreement. Whether you're planning to move in with your partner or if you have already been living together for a while, it's beneficial to explore the possibilities.