With property values sky rocketing in London, estate agents, letting agents and landlords would be prudent to advise unmarried couples buying or renting a home together to make a cohabitation agreement to make sure each of their interests are protected for such an important investment.
Janet Tresman, family law mediator and collaborative family solicitor at Altermans Law in Finchley, explains why drawing up a cohabitation agreement could save unmarried couples from unnecessary heartache and financial turmoil in the long run.
“When married couples divorce there are specific laws that give rights and obligations towards each other, and determine how property and finances are to be shared,” explains Janet. “However, when unmarried couples who live together decide to separate there is no consolidated legal framework to refer to if they disagree about property ownership, finances or children. Instead, there is various legislation and scattered cases which are difficult to access easily.”
If they are renting, the landlord should be informed if a partner moves in and you should consider adding both names to the lease. If the lease is only in one partner’s name, the other person may find themselves with a limited legal right to stay there, but it may only be for a brief period. They may also have to face litigation in the small claims court to obtain the return of their share of the deposit.
If a property is bought in only one person’s name, if the relationship breaks down the other person could be asked to leave at any time. Even if they have made contributions towards the outgoings, they would have no automatic right to stay in the property. They would have to apply to the court for permission, and if granted it may be limited for a brief time only.
If the couple are buying a home together they will need to decide how they are going to own the property from the outset, as joint tenants or tenants in common? They should also consider what they will do with the property if they split up, or one of them is unable to work and pay their share of the mortgage. Unless they have a cohabitation agreement to the contrary, they may only be entitled to a 50 per cent share of the equity in the property even if their contributions to the mortgage were higher.
If there are children involved, then they can apply to the court to be allowed to live in the property with them until the youngest child reaches the age of 18 or permanently leaves home, whichever is the sooner. However, this will not entitle them to a share in the property.
There may be other things to think about. If they have bought the house with the financial help from parents, will they expect to be repaid? If they have taken advantage of a shared ownership scheme to buy their home, they will need to clarify the exit strategy.
Using mediation is an excellent way to agree the terms of a cohabitation agreement. As the mediator, Janet will discuss the options in a dignified and respectful environment. Together, they can decide how long their cohabitation agreement will last for, any events that will trigger its end and any penalties for non-compliance.
Unlike married couples who can turn to the divorce courts for help, if living together does not work out they will have to sort it out themselves, or face some complicated litigation about property and children. A cohabitation agreement will help avoid unnecessary financial distress at an upsetting time.
Janet is a highly experienced family mediator and collaborative family law solicitor, representing high net worth individuals. She is a long standing member of Resolution and has served as a deputy district judge. Janet delivers a first class service in all aspects of family law, with minimum court intervention.
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own.