Perhaps you’re going to live in their place; maybe they’re moving in with you. Or you could be looking for somewhere new to buy together.
There is a lot to consider — what furniture do you need? How will you split bills? Who pays for that kitchen upgrade that’s sorely needed? How much deposit do you have between you?
Understandably, with so much to think about, a cohabitation agreement can often be way down the “to do” list, but it’s well worth giving it some thought sooner rather than later.
And here’s why.
Why should we have a cohabitation agreement?
An agreement protects you, and your partner, reducing the chances of lengthy legal negotiation, or the court determining the separation terms, causing more stress and incurring more costs.
It sets out your financial contributions at the beginning of your relationship as well as financial arrangements during the relationship, including clarifying property ownership or dealing with how assets should be divided if you split up.
For example, in a joint ownership situation, the agreement may clarify whether the property is to be sold, transferred or how equity should be divided if the couple separates. It could even determine household financial arrangements while you’re living together, for instance how bills should be handled.
You and your partner both sign the agreement, and it is essentially an “agreed position”. And, of course, both of you should take separate legal advice about what you include in it and the implications of that decision.
The myth of common law marriage
Many people are surprised to find out if they’re living together they don’t have the same legal rights and responsibilities as people who are married or in a civil partnership — no matter how committed you are.
In particular, despite what you might have heard, there’s no such thing as common law marriage in Scotland applying to cohabitants.
For many years in Scotland, it was recognised a couple could be married by “cohabitation with habit and repute”. This was abolished when the Family Law (Scotland) Act 2006 came into effect.
So even if you’ve lived together for years, and have children together, there’s no common law that offers protection if the relationship breaks down. Instead, cohabitants now have statutory rights under the 2006 act.
How long do I have to make a claim against a former partner?
Unlike married couples who have automatic rights to property in their spouse’s sole name, cohabitants’ rights aren’t automatic.
If you separate, and if you can’t negotiate your claim under section 28 the 2006 act with the help of legal advisors, you’ll have to make an application to the court within twelve months.
For a successful claim under section 28, the cohabitant must prove they have suffered economic disadvantage because of the relationship and that their partner has experienced an economic advantage.
Without a minute of agreement formally recording the contributions you both made at the beginning of their relationship, proving whether there has been an economic advantage or disadvantage can be time consuming and costly.
It can also be stressful given it’s necessary to resolve matters within 12 months to avoid court action.
So it makes sense, to minimise the time and legal fees in proving an economic advantage or disadvantage, to have an agreement in place as soon as you start living together.
When should we get an agreement prepared?
Ideally before you move in together, but even if you’ve lived together for a while, you can still have one put in place.
What happens if we move countries?
You’ll need to revisit your agreement.
A cohabitation agreement drafted in Scotland is only valid in this country.
What are my cohabitation rights if my partner dies?
You can make a provision in a cohabitation agreement for what you want to happen to your property if you die.
This is important because, unlike a spouse or civil partner, if there’s no will, a surviving cohabitant doesn’t have automatic legal rights to the deceased’s estate.
If you do decide to make a claim under section 29 of the Family Law (Scotland) Act 2006, you can apply to the court, but you must raise this action within six months of the date of death. The person who died must have been domiciled in Scotland and living with you in an “enduring and intimate relationship” immediately beforehand.
When looking at a claim, the court will consider a few factors, including the size and nature of the net intestate estate and any benefit you’ll get because of the death, such as pension or life insurance payments. It will also consider any other rights or claims on the net intestate estate including a surviving spouse.
It's important to be aware too if your cohabitant leaves their property to someone else in a will they have signed, it won’t be possible to make a claim under section 29 of the act.
How much does it cost to draft a cohabitation agreement and how long does it take?
There is a cost to drafting a cohabitation agreement. That said, it’s modest compared with potentially lengthy court disputes when you both must prove your contributions. Our fees for straightforward agreements start at £1,000 plus VAT. Where more complex advice and negotiations are required, the costs will be higher.
Where matters are straightforward and terms are generally agreed, cohabitation agreements can often be put in place within a few weeks.
This link takes you to where you can find out more about our pricing.
Recap
In short, while it might feel a bit like you’re “jinxing” things, it really is prudent if you’re moving in together to plan and have an agreement drafted and your will updated. It’s just a way of recording each of your investments. This is particularly important, for example, if your family has helped you with a deposit for a property.
Remember, it’s just in case. Almost like an insurance policy.
You can speak to one of our team about setting things in motion, or read more of our family law commentary, here.