A Cohabitation Agreement is a very useful document when setting out (1) how you and your partner/cohabitee wish to hold a property together that you intend to live at and (2) what other assets you have brought to the relationship/cohabitation, including belongings, accounts and financial arrangements when you move in together.
Cohabitation Agreements can be tailored to cover a wide range of matters, from your respective shares in your property, who would move out of the property in the event your relationship/friendship breaks down to who owns the crockery, and everything in between: bills, joint accounts etc. and even who will own and take care of a pet should you separate and go your separate ways. This is particularly useful where you have each brought items from previous homes and where you have each bought different items during your time living together; effectively a receipt for what you have brought with you / have accumulated.
Cohabitation Agreements are helpful in avoiding (selective) forgetfulness or disputes later down the line.
How to reach agreement
Consider and agree in what shares you intend to hold the property that you’re buying;
- Consider whether one of you will be investing more into the property than the other e.g. through a deposit and whether this will also be reflected in the amount each of you pays towards the mortgage
- Decide what each of you can afford by way of household bills and whether there will be a difference in contributions; and
- Also make a provisional list of the items you’re each bringing with you, so you know what the agreement could cover.
You each should obtain independent legal advice with regards to any agreement to ensure the agreement covers everything that you both need and you are fully aware of what you intend to be bound by. It will also ensure that the agreement is likely to be upheld and not seen as unfair should there be any dispute between you and your partner/cohabitee in the future.
It is also advisable to prepare a Declaration of Trust when purchasing a property to confirm the shares in which your property is to be held or if you are investing monies unequally into the property.
Household bills and mortgage repayments
It is important to bear in mind that, whilst you can agree to pay uneven shares of various bills or mortgage repayments e.g. if one party’s income is higher than another’s, this agreement is between you as private individuals and does not normally bind any provider to whom a bill must be paid. So if the bill or mortgage is in joint names, it is important to still keep tabs and make sure it is being paid in full, because the provider will seek the full amount from both of you if the account is in arrears.
The aim behind including, for instance, uneven contributions towards household bills or mortgage repayments is to ensure that nobody can claim later down the line that they paid more towards the bills or the mortgage and, therefore they deserve a higher share in the property on sale.
The agreement is a living document, so can (and should) be updated as and when required, much like a Will.