Divorce and Family Law

Cohabitation and Cohabitation Agreements

The words "cohabitation agreement" are not very romantic. "Constructive trust" and "equitable accounting" are not in your mind when you decide to move in with someone (often, indeed, you do not "decide" at all – it just happens). A "parental responsibility agreement" is not the first thing which comes to mind when a baby is expected by a cohabiting couple (something else which "just happens").

This guide outlines some of the legal implications which can arise where a couple cohabit, that is, live together without being married to each other. In some cases, rights and obligations can come into existence without either party realising it. More often, people assume that their interests are protected on cohabitation when the law in fact offers no help at all.

In most cases, perhaps, the formality of a cohabitation agreement is unnecessary. As time passes, however, the partners’ financial and property affairs become intermingled and, without realising it, people pass the point where their separate contributions, rights and obligations can be identified. This becomes even more important if there are children of the relationship.

Marriage provides both an obvious turning-point and a reasonably codified set of legal rules. It is less obvious when a cohabiting couple ought to consider formalising their affairs. Indeed, the moment one person mentions the subject of a cohabitation agreement is often the moment when the strains appear in the relationship.

We at Ambrose Appelbe are sensitive to this potential clash between the romantic and the practical aspects of living together and are well aware that a purely legal attitude from a Lincoln’s Inn solicitor could be the kiss of death to a happily informal relationship. Our approach takes account of the individual circumstances, and of real life, rather than some purist notion of how people ought to regulate their lives.

The starting point is to explain clearly what the legal position is and to offer practical suggestions which cover the most obvious situations. The important thing is not that couples should immediately rush into formal documentation, but that they should know how to recognise when this may be necessary.

This guide first sets out some statistics about cohabitation. It then explains the most obvious legal implications of cohabitation. Lastly, it summarises the most obvious types of agreements commonly entered into by cohabiting couples for their mutual protection.

Cohabitation Statistics

25% of non-married people aged between 18 and 49 in Great Britain cohabit. *

This percentage rises to 30% in Greater London. Cohabitation is chosen by an increasing number of people in Britain today so there is a growing need for law for cohabitants. It is becoming increasingly important to have a cohabitation agreement.

More and more young men and women cohabit with a partner rather then entering straight into marriage. 70% of first partnerships involve cohabitation. Roughly 3 in 5 of these relationships turn into marriage. An increasing number of women are having children whilst cohabiting. 22% of children were born to cohabiting couples in 1997 compared with just 2% 20 years ago. Once a cohabiting couple have had children they are just as likely to split up as a childless couple, and actually less likely to marry each other. Many partnerships last only a short time – 2 years on average.**

Whether a couple are in a homosexual or a heterosexual cohabiting relationship, the law imposes no commitment or obligations upon them, save for a certain limited obligation towards any children of any relationship. In the event of death, sickness or separation therefore, legal remedies are uncertain and complex.

Cohabitation - The Law’s Presumptions

In the absence of any agreement, the law may assume that one or more of the following applies

Express Trust:
For example a Deed of Trust that shows that there are at least two beneficial owners of any property.

Resulting Trust:
This is where a property is purchased by one person and then the property is transferred into the name of another person. A Resulting Trust is then presumed to arise in the favour of the person who has provided the money. A Resulting Trust can also arise where somebody has spent money on another person’s property with that person’s agreement and the only reason or explanation for the conduct is that they were to derive an interest in the land as a result (Hesletine v Hesletine 1971 1WLR342).

Implied Trust:
This is where a person seeks to gain an interest in a property by virtue of paying expenses even though they have not contributed directly to the purchase price and are not a legal title holder.

Constructive Trust:
In order to find a Constructive Trust there must be an agreement or common intention, whether expressed or implied between the parties; a promise or representation by the legal title holder; and some form of legal detriment suffered by the party claiming the beneficial interest (Grant v Edwards 1986 1CH638CA); or some sort of benefit conferred on the legal title holder.

Equitable Accounting:
This enables one person who has provided monies towards the property over and above their interest in it to claim back the sum they have spent on the property.

The fundamental principle is that equity is concerned to prevent unconscionable conduct and proprietary estoppel cases are usually cases where a dishonest or deliberate misleading of the other party is involved. Often it is where the party intends to keep the legal estate independently of the other party but has previously assured the co-habitee that this is not the case.

There must be both repeated promises and assurances and detrimental reliance on these promises to make it irrevocable. There must be sufficient causal link between the promises made and the detriment asserted: Grant v Edwards [1986] 2 All ER 426. The detriment must be pleaded and proved.

These equitable doctrines are ill-adapted to meet modern social conditions. In order to satisfy any of these doctrines it is necessary to recall distant conversations and conduct and establish precise evidence of intention which can be extremely problematic.

Once a Trust has been established the court will apply the principles as established from the case of Oxley v Hiscock [2004] FLR. Here the Court of Appeal stated that each party is entitled to that share which the court considers fair, having regard to the whole course of dealing between them in relation to the property. The crucial point is that the Court will look at what is fair and has a discretion to ascertain what this is.

Where death brings a cohabiting relationship to an end and the surviving cohabitant is making a claim for financial dependence, they can do this under the Inheritance (Provision for Family and Dependants) Act 1975. In addition, any cohabitant of more than two years’ standing can also make a claim under the deceased’s estate under that Act without needing to establish that they were being maintained by the deceased at the time of death.

Cohabitation Agreements

To protect cohabitants they should enter into any or all of the following agreements and they should both seek independent legal advice:

Cohabitation or Financial Agreement: This deals with the financial structure of the couples relationship.

Living Together Agreement: This deals with how a couple run their lives, setting out for example who is responsible for the day to day care of any children and what arrangements exist for contact if the relationship breaks down.

Trust Deed: If a couple purchase a property it is a good idea to set out clearly what will happen to the property in the event of the breakdown of the relationship.

Parental Responsibility Agreement: If the couple have children this should be considered by the father as he does not have parental responsibility unless there is a parental responsibility agreement.

Change of Name Deed: One partner to the couple might find this useful since it helps to promote a "family unit" to the world.

Lasting Power of Attorney: In the event that one of the couple becomes incapacitated the other partner will be able to run their affairs.

Living Will: A cohabitant may be interested in stating what should happen e.g. in the event that they are on a life support machine.

Wills: Advice should be sought on Inheritance Tax implications

Nominating a Partner to take benefits under a pension: This can be extremely important because there is no automatic right for the cohabitant to receive the dependant’s pension in the event of the pension holder’s death. It is however possible to nominate a person.

Cohabitation Agreements - Conclusion

A cohabitation or financial agreement is not necessarily enforceable or binding. Increasingly, however, they are becoming more persuasive and can always be submitted as evidence to the Court. Even if the couple have an entirely justified trust in each other, it is sometimes sensible to have a formal agreement to protect the survivor against claims by third parties such as a former spouse. Ambrose Appelbe are experienced at drafting agreements which reflect the true wishes of the parties whilst complying with the current requirements of the courts.

To discuss your own situation or to make an appointment, contact Lisa Bolgar Smith on 020 7242 7000 or use the Contact Request Form.

* Office of National Statistics 1994/1996

** Findings from Office of National Statistics 1994/1996 and economical research (22/11/00).

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This web site contains general information only and does not constitute legal advice. You should take suitable advice as to your specific circumstances. Ambrose Appelbe accepts no responsibility and disclaims all liability in relation to such information.