What is a cohabitation agreement and when would you need one?

What is the meaning of a cohabitation agreement?

A cohabitation agreement, also called a ‘living together agreement’, records arrangements between a couple who are living together. A cohabitation agreement can also cover more than two people if they all live together.

What is included in a cohabitation agreement?

The kinds of arrangements that are recorded in a cohabitation agreement include:

• Financial arrangements, for example, who’s paying the mortgage, rent or bills
• Responsibilities
• Rights while living in the property
• Ownership of personal property, including items such as cars, furniture or art
• What will happen to items or property if the cohabiting people decide to no longer live together

When is a cohabitation agreement needed?

A cohabitation agreement can be established at any relationship stage, whether you’re just moving in together or have lived together for years already.

What matters more than when the agreement is first drafted is how regularly it is reviewed and updated. Like any legal document, a cohabitation agreement should be revisited regularly to make sure it reflects any major life changes.

Significant events such as purchasing a property, having children, receiving an inheritance or experiencing any other big change in your financial circumstances should prompt a review to make sure your agreement is up-to-date and effective.

Is a cohabitation agreement legally binding?

While a cohabitation agreement is a legally binding contract, its enforceability by the courts is not always guaranteed. The court is most likely to uphold the agreement if it meets legal requirements.

To make sure it holds up, it's important to follow contract law principles when drafting it. That's why it's best to have a legal professional draft your cohabitation agreement.

What happens if there’s a disagreement?

Property

Without a cohabitation agreement, people can often spend large amounts of money on legal proceedings to decide their respective shares in property that they either co-own or that is owned solely by one of them but to which another may have contributed.

With a cohabitation agreement, these disagreements are often simpler and cheaper to settle, as your intentions are set on paper.

Children

It’s always better to resolve issues around children outside of the court. The court has a no-order principle, so will only make an order if it’s in the best interest of the child. Most parents formalise their agreement themselves in a parenting plan – or get professional help if they’re struggling to agree on things.

If there’s a disagreement about child costs, you can use a co-parenting service like amicable to reach an agreement and have your arrangement documented in your parenting plan.

You can also apply to the Child Maintenance Service for child support after separation. If the parent who doesn't live with the children doesn't pay child support as expected, the court can consider this when deciding how much of the home each person owns.

How much does a cohabitation agreement cost?

The cost of a cohabitation agreement depends on your situation and how complicated the agreement is. It can be expensive, and you'll need a lawyer to draft it. However, having one can be very helpful, providing security and peace of mind if you need it.

Do I need a cohabitation agreement?

Cohabitation agreements are normally for couples who choose not to marry or enter a civil partnership but want to live together. They're also used by people who combine their finances to buy a property together.

For instance, if a property is co-owned, a cohabitation agreement can detail how to split the proceeds if the property is sold after they stop living together.

You can create a cohabitation agreement no matter how the property is owned – whether it's rented, jointly owned or solely owned.

What are the benefits of a cohabitation agreement?

The main benefit of a cohabitation agreement is that it provides financial security and reassurance, especially if the property is owned. While there might be less need for one if the property is rented, it can still help manage any future disagreements.

Here is a list of potential benefits of cohabitation agreements:

• Clarity on financial contributions – It outlines how each person contributes to rent, mortgage payments, household expenses and maintenance costs.
• Keeping your assets safe – If one person owns the property or has invested more, the agreement can clarifies ownership and how assets will be split if the property is sold.
• Legal certainty in case of separation – Unlike married couples or civil partners, cohabiting partners don’t have automatic legal rights to each other’s property or assets. A cohabitation agreement ensures that both people understand their rights and responsibilities if they separate.
• Reducing potential disagreements – Having a written agreement can prevent disagreements about money, property or possessions, making separation less stressful and expensive.
• Arrangements for joint debts – If one person takes on more financial responsibility, such as paying off a joint mortgage or loan, the agreement can specify how this will be handled in the future.
• Arrangements for inheritance – While a cohabitation agreement doesn’t replace a will, it can clarify financial arrangements and help prevent inheritance disagreements if one partner passes away.

Cohabitation agreement FAQs

Do common law spouses need a cohabitation agreement?

The term ‘common law spouse’ is a myth, but it's sometimes used for couples who live together without being married. Whether a couple needs a cohabitation agreement depends on their situation since these agreements aren't required. However, cohabitation agreements can offer security, stability and financial freedom, so they are worth considering.

Are common law spouses entitled to each other's assets after cohabitation ends?

No, the law doesn't allow someone to automatically claim their ex-partner's assets after cohabitation ends. A cohabitation agreement can include clauses for maintenance payments to help one partner adjust financially, but this isn't guaranteed by law.

Cohabitation agreement vs declaration of trust: what’s the difference?

A cohabitation agreement sets out the financial responsibilities, rights and obligations of people living together. This covers aspects like household expenses, property ownership and what happens if the relationship ends. In contrast, a declaration of trust, also called a deed of trust, is a legal document specifically focused on property ownership. This details each person's financial interest in a property and how proceeds will be split if it is sold.

Cohabitation agreement vs prenuptial agreement: what’s the difference?

A cohabitation agreement is for unmarried couples who live together. It outlines financial arrangements and responsibilities in case they separate. A prenuptial agreement, on the other hand, is for couples who are getting married and want to protect their assets in case of divorce. While both documents aim to provide financial clarity and security, a prenuptial agreement is tied to marriage and often has a stronger legal standing in court, whereas a cohabitation agreement applies only to those who choose not to marry or enter a civil partnership.