Do you know what you are entitled to following a separation?
Client’s often come to see me and ask about what they, or their partner, are entitled to following a separation, frequently referring to their rights as a “common law spouse”. It may surprise you to learn there is in fact no such thing as “common-law spouse” under English Law. Indeed, according to a survey carried out on behalf of Resolution, two thirds of cohabiting couples are unaware of this fact.
This often leads to unexpected, undesirable and potentially unfair outcomes in circumstances where no or insufficient consideration has not been given to what each party expects or would want to happen in the event that they separate. Understandably, this is something most people do not really want to think about, far less discuss with their partner. However, consider a couple of scenarios, and what would happen, and you may change your mind. Where cohabiting couples jointly own their home, English law assumes that the property will automatically be divided 50:50 – even if one partner contributed more to its purchase.
The opposite is also true. A scenario that I come across frequently is where a house is bought for a couple to live in, but one of the parties cannot get a mortgage. This may be because they have a poor credit history, or they already own another property, and has an existing mortgage, perhaps with a previous partner or spouse. As a result the property is bought in their partner’s sole name, even though they may both be contributing towards the deposit, and may each have every intention of contributing towards the monthly mortgage payment and other household bills. In the event that couple separated, the party would have little automatic rights over the property, and would not be recognised as a legal owner. In that situation, they would be likely to be left trying to establish through the court that they had some other financial interest in the property
In both of these examples, and in many more besides, separating unmarried couples rely on a hotchpotch of legal remedies and arguments which are all too often difficult to establish and evidence, and disputes in this area are often protracted and expensive to resolve. While it is possible to claim an interest in property in which you are not a legal owner, the law in this area is complex and the outcome uncertain, and it can require potentially expensive and highly technical litigation to determine.
There are many who believe that the law in this area is outdated, and fails to reflect the reality of modern family life and circumstances. According to Resolution’s research, the number of unmarried couples has doubled since the mid 1990s and stands at nearly three million, while the number of children living with unmarried parents has risen from 0.9 million in 1996 to 1.8 million in 2012. In addition, there are an estimated 6,000 same-sex couples, not in a civil partnership, who have children. Although there have been moves to update the law in this area, to provide a greater level of protection or recourse to cohabiting couples, the law so far remains untouched, leaving many people at risk.
It is therefore essential that couples give consideration to what would happen, and what they would want to happen, as far as the financial arrangements are concerned, in the event that they separate, and consideration should be given to entering into a cohabitation agreement to properly and legally document the financial arrangements between them before moving in together.
What is a cohabitation agreement?
A cohabitation agreement essentially records who owns what and in what proportion within the relationship, and allows you to determine how property, household contents, personal belongings, savings and other assets should be divided in the event that the relationship comes to an end. Such an agreement can also be used to set out how you will manage your day-to-day finances, including how much each contributes to rent or mortgage and household bills, and what you would expect to happen in the event that the relationship came to an end.
This may not sound like the most romantic thing in the world, and of course it can be a difficult subject to raise: many client’s tell me they feel bit awkward bringing up the subject with a partner, particularly when it may be relatively early days of the relationship. However, reaching agreement and providing financial certainty within a relationship can actually relieve pressure or worries of either or indeed both of you, and can save a lot of disagreement and arguments down the line. A cohabitation agreement enables couples to agree things in a fair and reasonable way from the outset, and avoids dealing with it in circumstances when emotions can be running high if a relationship breaks down.
This may be of particular significance to those of you who are considering moving in with a new partner having been divorced or separated before, perhaps where you have children from a prior relationship, or where a property is being purchased in joint names, but in unequal shares. Perhaps the property is to be bought in one of your names, for example if there are issues with the mortgage, but you are both going to be contributing towards the deposit or paying the mortgage. Or, if one of you is to pay for renovations or an extension to the property. Perhaps you simply want to record who is going to be responsible for paying what, and agree the circumstances in which that could change.
In any of those circumstances, and many more besides, the security that can come with having arrangements in place in the event that the relationship ends can be enormously beneficial and reassuring, and may be essential to ensure you receive what you are entitled to or would expect.
Contact a member of our Family Law team to discuss how a cohabitation agreement could work for you and your circumstances.