An Ultimate Guide To Cohabitation Rights & Agreements

Introduction To Cohabitation Rights And Debunking A Popular Myth

In the UK, 22% of couples living together aren’t married or in a civil partnership, and they represent the fastest growing family structure. Yet many of these people believe that after a certain period of time they will automatically gain rights equal to marriage or civil partnership (“common law marriage”). It’s simply not true.

Even if a cohabiting couple have been in a relationship for many years and raised children together, neither person will be entitled to anything if the relationship breaks down. No capital. No maintenance (except child maintenance, perhaps). Nothing at all.

This is a really common misunderstanding and it’s a cause of so many issues after separation or death.

This guide is designed to help you better understand the legalities surrounding cohabitation, as well as the benefits a cohabitation agreement can bring. Please note this is for general purposes only and you should always speak directly to a solicitor about your specific case. To discuss your circumstances with one of our family law experts, please call 0333 344 6302 or email info@blanchardslaw.co.uk.

How Property Ownership Works In The UK

To appreciate the role of a cohabitation agreement, you need to understand a bit about UK property ownership laws.

The ownership of property is dealt with in two ways – legal ownership and beneficial ownership.

Legal ownership means you’re on the deeds. Beneficial means you’re not on the deeds but may still have a right to income from the property or a right to share in the proceeds or value. More on this shortly.

If both parties are on the deeds of a property, then it will either be:

• A Joint Tenancy – a Joint Tenancy is where there is a 50/50 split. If one person dies then their share goes to the survivor automatically (Right of Survivorship), independently of any instructions in a Will.
• Tenancy in Common – this is where the Right of Survivorship does not apply, and on death, their share falls into their Estate to be dealt with according to their Will. Normally, people ask for ownership to be recorded at the land Registry in this way, where there have been unequal contributions to a house purchase. If, for instance, one person has paid a larger deposit than the other and wants this reflected, then they can agree to hold the property in unequal shares. This is often accompanied by a ‘Deed of Trust’, which specifies exactly how much more the higher contributing person should get on a breakdown of the relationship. Everyone who has put more into a property, whether by way of deposit, or by way of ongoing costs, should consider this Deed, as it is the only way of establishing your interest to a court’s satisfaction.

In the cases of many cohabiting couples, however, only one person is on the deeds. Yet it is possible to not be a legal owner yet still have a financial interest in the property. This is known as beneficial interest.

The Significance Of Beneficial Interest, And How It Can Be Established

Beneficial interest is hugely important as it means one person can gain an economic interest in the property without the benefit of a Joint Tenancy or Tenancy in Common. One of the objectives of a cohabitation agreement should be to clarify expectations around whether or not the other occupier has a beneficial interest.

We should say at the outset that in practice it is very difficult to establish  beneficial interest, and such a claim should not be approached lightly. If the property owner does not agree, you will have to embark upon a costly and lengthy court process, and if you lose, you will have to pay all the other person’s legal costs. So you should take legal advice at the earliest opportunity.

There are two ways beneficial interest can be established. One is through contributions. For instance, the non-owning person may make a significant contribution to a property through a deposit or renovations that raise its value, or by paying for a significant proportion of the mortgage or other household expenditure moving forwards.

The operative word here is “significant”. Just because you’ve been paying £800 a month towards the mortgage, doesn’t mean you’ll automatically have rights. After all, you would have had to pay rent elsewhere had you not have lived in the property. Similarly, just because you paid for a new bathroom, does not mean the value of the property was materially affected, or that you can get that money back. These contributions therefore have to be beyond a certain threshold relative to the value of the property, such that it would be unfair to ignore them.

The other way to gain beneficial interest is through communication of an intention. If the person who owns the property has been clear that he or she regards the other part of the couple as a property owner, and there is evidence to back this up, then that may be grounds for the non-owning person to establish a beneficial interest.

Imagine, for instance, the non-owning person receives a bonus and intends to use it to buy another property. But the owner says “No, you don’t need to do that. This house is ours. We should use that money on a holiday or school fees.” If the non-owning person acts on that promise and then later the relationship breaks down, they have done so to their financial detriment and may have a legitimate claim to beneficial interest in the property.

So intention is very important and is another reason why cohabitation agreements which set out clear expectations are so valuable.

What Is A Cohabitation Agreement?

A cohabitation agreement is a legal document between people who are living together but not married or in a civil partnership. It typically applies to romantic couples but can also be used between housemates, friends and siblings.

Cohabitation agreements exist to bring clarity and help couples plan for future events. The document lays out arrangements for finances, property and children whilst the parties are living together, as well as in the event of separation or death.

Why Cohabitation Agreements Matter

Having a legal document like a cohabitation agreement can be useful, alongside a Will, as it offers clarity and protection for those in the relationship as well as next of kin and other family members. This is particularly significant in the event that the relationship breaks down or one person dies, but can also help you divide up bills and other responsibilities while you live together.

Whilst every case is unique, it can help to look at cohabitation agreements from two perspectives:

• The person seeking to protect their assets – more often than not, the person initiating the agreement is the wealthier of the couple. Rather like a pre-marriage agreement, they want to hold onto their assets, and ensure the person with whom they’re going to live will not gain rights to their property.
• The person seeking to gain an interest in those assets – from the other perspective, if someone is about to commit years of their life to a relationship and possibly make decisions to their personal financial detriment (such as career sacrifices) for the benefit of the other person, or their children, it’s natural they should want protection in the event of separation or death. If you’re not married or in a civil partnership, a cohabitation agreement may the a good way to achieve that security. A better way, obviously, would be to be on the property ownership deeds!

What Typically Goes Into A Cohabitation Agreement?

A cohabitation agreement is not a court document so can contain anything that’s going to be helpful in setting expectations, but the typical agreement might state:

• When the parties will begin living together.
• Whether or not the non-owning person will gain an interest in the property.
• How day to day living expenses will be shared between the parties.
• What will happen to their possessions should the relationship break down (such as items of furniture or pets).
• And anything else that’s liable to have to be dealt with upon a separation.

Frequently Asked Questions

We’ve already moved in together. Is it too late to get a cohabitation agreement?

Not at all, you can make an agreement at any time.

In a perfect world couples go through this process prior to moving in together, but often there is a later catalyst such as having children or getting a mortgage.

I bought a property with my ex as Joint Tenants, but I paid the majority and no longer want the Right of Survivorship to apply. Can I change it now?

Absolutely. You can change the arrangement to a Tenancy in Common with a very simple document called a “Severance of Joint Tenancy”. We prepare this on your behalf. Only one person needs to sign the document and then it can be served on the other person via recorded post.

It should be noted there have been cases where the recipient has attempted to pretend they have not received the document. But as long as the delivery has been tracked then the court should dismiss any claim to the contrary.

We are cohabiting and have children. How does that affect things?

If you have children, the law does offer some protection. The court has the power to intervene, usually to enable one parent to secure financial assistance from the other, particularly in relation to housing. This is separate to child maintenance, which is ordinarily managed by the Child Maintenance Service.

Cases most commonly brought before the courts are for the provision of capital for housing, either by way of a lump sum or a property settlement or transfer order.  So if you find yourself in a situation where you are the primary carer of your child, and the property in which you live is owned by your partner, you should seek legal advice with a view to exploring whether you can secure occupation of that property to continue your role in bringing up the children whilst they are dependent.

During this period there are an unlimited number of claims that can be made under Schedule 1 of the Childrens Act 1989, such as for school fees and other expenses.

However, it’s important to note that when the children turn 21 the property reverts to the owner. If the child is disabled, the court may be able to extend this arrangement indefinitely. 

Again, as above in relation to beneficial interests, a lack of agreement on these issues may end up in expensive litigation. Housing and other financial provision is only feasible if the owner has considerable income or capital, so it is vital that proper legal advice is taken at the outset. These warnings would not apply to child maintenance, which is dealt with by the CMS, and should not cost the primary carer parents anything to pursue.

Do we need a lawyer to put together a cohabitation agreement?

No, but given the long term implications it’s sensible to seek legal advice.

I’ve bought a property in my name and want to ensure my cohabitee doesn’t establish beneficial interest. Any advice?

We would advise that you have a cohabitation agreement drawn up that states the cohabitee will not establish an interest in the property.

We would also advise that your cohabitee doesn’t contribute to the mortgage, but rather to just food, holidays, utilities and other everyday expenditure.

We have a cohabitation agreement that states I have no beneficial interest in the property, but since then my partner assured me the property is ours. How do I go about establishing beneficial interest if I have no written evidence?

If the intention changed as the relationship progressed, you may be able toestablish a beneficial interest. However, without clear evidence it could be hard to prove, and we would generally dissuade clients from bringing those kind of claims. They are expensive and if you lose you will be ordered to pay the other person’s costs.

The process itself can also subject those involved to considerable emotional strain. Each person would need to give detailed statements and be cross-examined, followed by a final hearing. Then the judge would decide who he or she believes.

Instead we would recommend ADR (Alternative Dispute Resolution), at least as the first step, in the hope that this less combative approach leads to an acceptable outcome for the couple. In fact if you skipped this step and went straight to court, you could be penalised by the judge as you have an obligation to negotiate.

I am living with my partner but we are not married. What would happen with our other shared assets in the event of my death?

If you’ve got shared assets then for most, the right of survivorship will apply. If you have a joint account, for example, your partner will automatically inherit no matter what it says in the cohabitation agreement or Will.

With pensions, however, that’s not always the case. You would need the pension membe to nominate their partner, or otherwise it could go to the next of kin, such as children. There have been lots of cases where former cohabitees have tried to establish claims to pensions or other assets where a person has died Without a will and it can be very difficult.

In short, it all depends on the specific asset, and in the case of pensions, what the scheme rules are.

Conclusion And Key Takeaways

Whether you’re moving in together for the first time, or considering children or a new mortgage, these are hugely exciting times in a relationship. Yet they’re also moments with potential legal and financial ramifications.

To ensure you do things properly, we strongly suggest creating a cohabitation agreement with your partner. But in the meantime, here are a few of the key things to keep in mind

• There’s no such thing as common law marriage in the UK – if you want to attain rights then speak to a solicitor.
• Be careful what you promise to your partner.
• Don’t rely on verbal agreements to establish a beneficial interest – make sure things are written down.
• If you want to protect your assets, don’t allow your partner to contribute towards them.
• And finally, remember that children change everything.

To speak to one of our experience family law specialists about your specific circumstances, please call 0333 344 6302 or email info@blanchardslaw.co.uk.