Legal Consequences of Cohabitation

Cohabitation means to live together as a couple without being married.

If you are cohabiting with you partner you do not have any special rights as a couple. According to English law neither partner in a cohabiting couple can make a claim for maintenance from the other. Cohabiting couples cannot claim a share of their former partner's assets as of right, if they break up or stop living together.

However, if you own part of a property or have made contributions toward it you may have a claim.

OWNING A PROPERTY TOGETHER

Where land and the property associated with it is owned by two or more people, they each have a simultaneous interest in the land and are known as "co-owners".

There are two ways in which co-owners may hold property and it is important to agree which way you will hold your property. This is because the treatment of the property on your death is very different:

  • As joint tenants.

Under a joint tenancy, if you were to die, your share would automatically pass to the other joint tenant, no matter what it says in your Will. Similarly, if the other joint tenant was to die, their share would pass automatically to you. This is known as the right of survivorship.

  • As tenants in common.

If you hold the property as tenants in common, you each have a distinct beneficial share in the property. This could be a half share or it could be another proportion, as agreed between you.

If you were to die, your share would pass according to your Will (or the “intestacy rules” if you do not have a Will). The “intestacy rules” mean your estate will be passed to your closest living relative. There is an official line of inheritance so if you have children they will share your assets equally, if you have no children the next in line will be your parents, then any brothers and sisters and so on. The same “intestacy rules” will apply to the estate of your partner if he or she does not have a Will.

If you decide to hold the property as joint tenants, but later change your mind (for example, if your relationship breaks down), it is possible to sever the joint tenancy, and change your ownership to tenants in common in equal shares. This is straightforward and can be done by a simple letter (see model letter below). You then need to register the change at the Land Registry by applying for a Form A restriction. The form that you need to complete to do so is available here: https://www.gov.uk/government/publications/form-a-restriction-application-to-enter-sev

If you are investing differing amounts in the property, or one person is paying more of the mortgage than the other, you may wish to agree to own different shares in the property. You should discuss and agree this at the time of purchase. Your conveyancing solicitor will then ensure that your agreement is properly recorded.

If you decide to move forward as tenants in common or with differing shares of the property you should ask your solicitor to prepare a Declaration of Trust on your behalf, to be signed by both you and your partner. This will confirm the extent of your respective beneficial interests.

A Declaration of Trust is a document which sets out how much each party is entitled to when you sell your property. If you separate in the future, and need to prove your share in the property, this document is considered conclusive evidence of the extent of the beneficial interests under a trust of land in most circumstances.

If one partner in a couple later invests in a shared property (for example, by paying for an extension of a lease or improvement works) then again you may wish to agree that your ownership of the property changes from equal owners to some other. You must agree on this before you invest the funds. That agreement must then be recorded in a supplemental Declaration of Trust or cohabitation agreement.

If you later separate without having entered into a specific agreement about which share you each own, and sell the property, then you may face difficulties in agreeing how to divide the sale proceeds.

If one of you believes that they are entitled to more than half of the value of the property, and this is not agreed, then you may need to make an application to court to resolve the position. The court will then have to determine whether there was an agreement between you and your ex-partner that your shares should be something other than 50/50 or whether there are reasons why the court should imply or infer that there was such an agreement.

This sort of application is very expensive and can be avoided simply by making sure that at the point of purchase the shares in which you will own the property are agreed and this is properly recorded in a Declaration of Trust. If either of you invests considerable sums at a later stage such that you agree that the proportions should change, you should ask a solicitor to draft a supplementary Declaration of Trust.

While it might be possible to argue that the legal title does not reflect the proportion of profit you should each receive from a sale of your property, and that there is an implied agreement of how to split the proceeds in place, this is a very difficult area of law, and it would be best to take legal advice.

Model Letter to Severe Joint Tenancy

How to use this document:

You will first need to give notice to the other owner that you wish to sever the tenancy by using the document below. Then you will apply to register the change at the Land Registry by applying for a Form A restriction. When you apply for the Form A restriction, you will need to produce either:

  • The original or a certified copy of the notice of severance and a signed acknowledgement of receipt by the other registered owner; or
  • The original or a certified copy of the notice of severance and a certificate confirming that the notice was given to the other registered owner; that it was sent by registered post or recorded delivery service to them at their last known place of abode or business and has not been returned undelivered.

It is therefore important that either:

  • the other owner completes the acknowledgement section of the document below, and returns the original notice to you so that you can send it to the Land Registry, or

  • that you obtain proof that you have sent the notice to them in the proper way. You must therefore send it by registered post or recorded delivery to the other owner by name, at their last known place of abode or business.

For more information: https://www.gov.uk/joint-property-ownership/change-from-joint-tenants-to-tenants-in-common

If you have any concerns, please ask a conveyancing solicitor to help you.

[ADDRESSEE]
[ADDRESS LINE 1]
[ADDRESS LINE 2]
[POSTCODE]

[DATE]

Dear [NAME],

Intention to sever a joint tenancy

I, [NAME], by this letter, give you notice that from [DATE], I wish to sever our joint tenancy in the property known as [ADDRESS] (the Property), registered at HM Land Registry under title number [TITLE NUMBER].

We will now hold the Property as tenants in common in equity in [equal shares.] [the following shares1:

[ %] for [NAME]
[ %] for [NAME].]

[NAME OF SENDER]

Signed .....................................................
Date ........................................................

[NAME OF RECIPIENT]

Signed .....................................................
Date ........................................................

I, [NAME] confirm that I have received and accepted the above Notice of Severance from [NAME] and agree that he/she may from [DATE] apply to HM Land Registry for a restriction to be placed on the proprietorship register of the Property indicating that we now hold the Property as tenants in common.

[NAME OF SENDER]

Signed .....................................................
Date ........................................................

[NAME OF RECIPIENT]

Signed .....................................................
Date ........................................................




1 Unless you have specifically agreed to hold different shares, the tenancy will generally be split equally between you.

RENTING A PROPERTY TOGETHER

If you are unmarried and live in a home owned or rented by your partner (including social housing) you usually have no rights to stay there if they ask you to leave.

It is better for partners who are living together to be joint tenants, as this gives them equal rights and responsibilities. Many social housing landlords will require partners who live together to take on a tenancy as joint tenants. It is possible to change from a sole (where only you or your partner is the tenant) to joint tenancies if the sole tenant and the landlord agree.

COHABITATION AGREEMENT

A cohabitation agreement is a document which records what two or more people who have agreed to live together as a couple have agreed about their living arrangements.

It records each party's rights and responsibilities in relation to the property where they live or intend to live together, financial arrangements between them, both during and following cohabitation and what will happen if they decide that they no longer want to live together.

A cohabitation agreement can also be used to record who owns personal property such as cars, furniture or art which may be enjoyed by both parties when they live together, but should be returned to the owner if cohabitation ends.

Cohabitation agreements are often entered into by couples who want to regulate their financial and living arrangements both during cohabitation and if cohabitation comes to an end.

A well drafted cohabitation agreement can also record each party's legal interest in the property, and what share of the profit you will receive on a sale (although this can also be done via a Declaration of Trust – see below).

The terms of a cohabitation agreement may not always be upheld and enforced by the court.

The Law Commission has said that the extent to which cohabitation agreements are lawful is governed by the ordinary rules of contract. This means they can be challenged on any of the following ordinary contractual principles:

  • Fraud – where one party was intentionally misled by the other about some important facts;

  • Duress – where one party was coerced to sign under for example economic pressure, threat of violence or harm;

  • Undue influence – where one party may have acted not under their own free will;

  • Misrepresentation – where one party may have signed based on a false representation of important facts by the other;

  • Mistake- where one party may have signed by mistake or misunderstood the content of the signed document;

  • Illegality on other grounds.

An agreement should also always include a “severability clause”, so that if any part of the contract is later found to be unenforceable it can be removed from the document without affecting the validity of the remaining clauses.

If you are buying a property with the intention of cohabiting it is a good idea to have a cohabitation agreement when you complete. This way the parties' intentions are clear and have been recorded from the start. Alternatively, if you decide to move in together after a property has been purchased, a cohabitation agreement can be entered into at any time, before or after cohabitation has begun.

It is not essential to have the agreement in place before or at the same time as you move in together. It is more important to make sure that the agreement is not executed at a time when either party could say that they were in a vulnerable position which was exploited by the other by exerting undue pressure or influence on them, as this could make the agreement voidable.

For example, if a couple have been living together and want to enter into an agreement due to a change in their personal circumstances (such as the birth of a child), it is important to ensure that the agreement is negotiated and signed at a good time, and not, for example, when a new mother is suffering from post-natal depression, or is unwell following the birth of a child.

COHABITATION AGREEMENT OR DECLARATION OF TRUST?

A Declaration of Trust will only record the parties' respective legal and financial interests in the property. By contrast, a Cohabitation Agreement can deal with a wider range of issues, including the following:

  • How the mortgage and other household expenses are to paid, by whom and in what proportions.

  • What should happen if one co-owner wants to sell the property and the other does not.

  • The arrangements for one party to buy the other's share.

  • How and when the property is to be sold.

  • Ownership of joint and separate property, if cohabitation comes to an end.

  • Financial support between the parties during and after cohabitation ends (if any).

  • The living arrangements and financial provision to be made for the parties' children, if cohabitation ends.

It is important to ensure that there is no conflict between the two documents, which could lead to a misunderstanding about the parties' intentions at a later date.

BANK ACCOUNTS

If you are living together and you and your partner have separate bank accounts, neither of you can have access to money held in the other partner’s account. If one partner dies, any balance in the account will be part of your partner's estate and cannot be used until the estate is settled.

If you have a joint account, then both you and your partner have access to the account, even if only one of you pays into it. If your relationship ends, the money will belong to both of you. However, if one of you didn't use the account at all, for example, you didn't pay any money in or take any out, it may be difficult to claim that you have any right to it.

DEBTS

You are liable for any debts which are in your own name only, but not for any debts which are just in your partner's name.

You may be responsible for the whole of debts in joint names and for other debts for which you have 'joint and several' legal responsibility. This means you both have equal responsibility for the entire debt. For example, in England and Wales, if you owe council tax, you and your partner will both be responsible for the whole debt, regardless of whether one of you contributes or not, so paying half will not clear your responsibility if your partner does not do the same.

If your partner has a debt for which you have agreed to be a guarantor, you will also be held legally responsible for paying it.

NAME

You are entitled to be known by whatever name you wish and can change that name at any time. Two people living together can decide to use the same family name, although legally they do not have to. You do not have to follow a legal process to start using a new name, but if you wish to prove your change of name (for example to change your bank accounts, driving licence etc) you will need a deed poll. For further information regarding making your own deed poll, and registering it with the court: https://www.gov.uk/change-name-deed-poll

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