A cohabitation agreement is an agreement made between partners who are not married yet share either the same property or substantive assets. The idea is to protect their own interests in the event that a breakup should occur.
The general view is that cohabitation agreements are enforceable as long as they are entered into freely, it is often advisable for independent legal advice to be taken by each party.
The purpose of a cohabitation agreement is to deal with any potential disputes before they arise. Therefore, having clearly defined boundaries is vital. For example, if the property is to be shared, the cohabitation agreement should set out in what percentage. Making agreements explicit now will help reduce the prospects of disputes later.
What is a joint asset?
Anything that is purchased by two or more people can be regarded as a joint asset. This can include assets such as cars and houses. Even where all the money for an asset comes from one individual it may be implied to belong to both parties. Establishing who has an interest and in what can become a long and drawn-out process so it is best to put in writing what will belong to who. This could be particularly relevant a house which may be registered in one-person’s name.
If one person owns the property and the other person moves in it is particularly important to establish the relationship if they are going to pay a contribution towards either the mortgage or the bills. The relationship should define whether the person moving in is a tenant and therefore no equitable interest is being built up or whether the person moving in is going to receive an equitable interest in the property. The practical effect of this distinction is if someone builds an equitable interest and then the relationship breaks down, they may be entitled to a percentage of the property. This means that if you cannot raise sufficient finances you may be forced to sell your house.
For further information on cohabitation agreements contact the Parnalls Litigation team on 01566 772375 or alternatively email email@example.com
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.