Cohabitation: Pitfalls and Protection

YouGov recently undertook research for us, asking cohabiting couples about their understanding of their legal rights. 35 per cent of cohabitees questioned either believed that living together for one year gave them the same rights as married couples, or did not know what rights they had. In fact, if a cohabiting relationship breaks down, neither party can claim maintenance from the other for their own benefit and the court cannot reallocate resources between them on the grounds of fairness.

Property ownership

41 per cent of the couples questioned bought their home as “joint tenants”, 13 per cent as “tenants in common” and 40 per cent in the name of one partner. Only 33 per cent of the couples said they had been advised about the different options.

Many will not know that joint tenants are presumed to own the property equally even if they did not contribute equally to the purchase. Only half of the couples interviewed contributed 50 per cent of the deposit and only 42 per cent pay equally towards monthly mortgage repayments; the rest would be wise to buy as tenants in common and make a declaration of trust stating clearly each party’s share.

If property is bought in one person’s name, it can be difficult for his/her partner to convince the court that they have any interest in the property. Similar considerations apply to the “Bank of Mum and Dad”. Parents should be clear about whether they are making a loan, a gift or actually buying a share in the property? A formal loan agreement is sensible; any investment purchase should be made in joint names, as tenants in common, supported by a declaration of trust. Parents should also take advice on the tax and practical implications of co-purchasing a property.

Death

On the death of one cohabitee, property owned as “joint tenants” will pass automatically to the survivor, not under the deceased’s will or intestacy. So, if you wish to leave your share in the property to anyone else (eg, children), the property should be held as tenants in common and a will made.

44 per cent of the cohabiting couples we surveyed had not made a will at all, so their assets will pass under the intestacy rules. These do not benefit unmarried partners at all. While the survivor might be able to apply to court for some provision, litigation is expensive and the outcome uncertain. Making a will provides clarity.

Children

73 per cent of unmarried couples with children did not know what support their partner should give on separation. Both parents are expected to pay to maintain their children until they finish education. The Child Maintenance Service assesses how much should be paid to the parent with the greatest caring responsibility, and will enforce payment.

The court cannot make a child maintenance order unless the paying parent’s gross weekly income exceeds a maximum figure (currently £3,000). However, an application can be made for the purchase or transfer of a property (only once) or for lump sums, eg, for a car. Any such orders must be for the benefit of the child. Once the child has finished full-time education, the property will be returned to the paying parent.

Cohabitation agreements

These contracts cover the ownership of property, finances and financial provision for any children, and remove uncertainty if a cohabiting relationship breaks down; but 76 per cent of those surveyed had never heard of cohabitation agreements, and only 10 per cent had one in place.

Conclusion

Many call for a statutory framework for the fair distribution of cohabitees’ property on relationship breakdown but law reform is unlikely in the short term. Clearly, countless cohabitees are simply unaware of the pitfalls that lie ahead if their relationship fails or one partner dies. Those contemplating cohabitation, or already living together, are advised to consider taking some or all of the steps mentioned above to minimise future disputes, stress and cost.