A cohabitation agreement is a form of legal agreement reached between a couple who have chosen to live together. In some ways, such a couple may be treated like a married couple, such as when applying for a mortgage or working outchild support. However, in some other areas, such as property rights, pensions and inheritance, they are treated differently. A cohabitation agreement contains documentation for a couple who want to live together in order to protect themselves from unnecessary cost and litigation should their cohabitation break down. They can clearly regulate their property rights and what arrangements might be made for mutual financial support, dealing with debt, caring for children, etc. The agreement also, much like a prenuptial agreement, allows the individuals concerned to determine in advance who will keep specific assets and what will happen to assets that have been purchased jointly if they separate. This agreement is intended to bind both parties.
Advantages
In the United States, about 15 million couples qualify as cohabiting. A cohabitation agreement can give each party an idea of the expectations of the relationship with the legal enforceability to protect against financial ruin or the loss of support that was promised. It is a good idea in that if the couple does break up, an altercation about who receives what may be less likely. However, the courts may occasionally change or ignore provisions set out in a cohabitation agreement if they feel that they are inadequate under the circumstances.
Disadvantages and limitations
Cohabitation agreements are not considered to be legally binding in the United Kingdom. A cohabitation agreement will usually not be adequate to settle all legal issues that might arise, so a trust deed setting out property rights and a will are also recommended.
It is a common misconception that there is a doctrine of "common Law marriage" in English law. But outside of marriage, there is no automatic right to home ownership, even if the home is shared for a long time. Instead, the only way in which ownership can be obtained is through ordinary trust law. Even if the parties are legally married, there is still no automatic right to home ownership. Instead, any transfer of ownership will be at the discretion of the court when exercising its power under the Matrimonial Causes Act 1973. In Canada, each province has legislation which governs the creation of cohabitation agreements. In Ontario there are restrictions on what can be included in such agreements. For example, clauses requiring chastity are unenforceable. Provisions which pre-determine issues of child custody and access as well as child support may be disregarded by a court. As well, in Canada, for a cohabitation agreement to be valid, it must be signed, witnessed, and accompanied by financial disclosure.
Prenuptial agreements
As afore mentioned, the term is also sometimes used loosely to refer toprenuptial agreements. These are often designed when one intends to protect his or her wealth in the event of the marriage ending in divorce. The contract aims to achieve a measure of certainty about what the financial "damage" would be if the marriage came to an end. However K v K has heightened the importance of prenuptial agreements by deciding that the wife had to stick by the terms of a prenuptial agreement she signed. The courts still keep their discretion about whether or not a prenuptial agreement will be upheld but this new case shows that the courts are in favour of couples making private agreements between themselves.
