Put some certainty into cohabitation
IT IS MORE common these days for couples contemplating marriage, particularly a second marriage, to enter into a pre-nuptial agreement.
However, it far less common for couples who simply wish to live together and who have no immediate intention of marriage, to enter into a similar type of agreement. There are, however, many good reasons for doing just that. While limited rights were introduced by the Family Law (Scotland) Act 2006, allowing cohabiting couples to make certain financial claims against one another on separation to address any economic unfairness that had arisen during their period of cohabitation, unfortunately this relatively recent legislation is still in a state of flux.
Accordingly, it is very difficult for solicitors to predict not only how courts will actually deal with any such claims but also the eventual outcome of any disputed claims in this connection.
One way to create certainty, where none exists at present, is to enter into a Cohabitation Agreement. Romantic it is not, but practical it certainly could be. Being realistic when first moving in together could certainly save emotional and financial heartache in the future for both parties.
Such an agreement could seek to regulate such mundane matters as contributions towards household bills, especially where a couple might have unequal incomes; the setting up and purpose of joint accounts ; and what should happen to the house and any other joint assets should the relationship end.
It could, for example, provide for the right of either party to buy out the other. This is particularly significant for unmarried couples as the law does not allow the court to force a joint property to be transferred to one party (unlike the law for married couples where the court can force such a transfer).
Such an agreement might not feature large in the minds of a young couple, with little wealth, setting up their first home together. But for an older couple, who may have already come through a divorce and do not wish to marry again, or for a couple for whom marriage is not important and who have or are hoping to have a family together, a Cohabitation Agreement would undoubtedly be worth considering.
Invariably such agreements need to be tailor made to suit individual circumstances. They can take account of, and recognise, non-financial contributions being made by one of the parties.
The obvious example being the “stay at home” house parent. It would be possible for the agreement to make provision for monthly support or housing in the event of a relationship breakdown.
An agreement could also take into account unequal contributions towards the purchase price of the property. As an aside, it is still unusual for a joint property to be taken in anything other than equal shares. But there is no reason why it is not possible to buy a house and hold title in unequal shares to reflect, for example, the contribution each party has made towards the purchase price.
Family life has changed hugely over the last 50 years with many people now choosing to simply live with their partners rather than to tie the knot. However, whilst trends have changed immeasurably, the law has been slow to keep up with such changes.
Moving in with a partner should be an exciting time, whether buying a property together, or just moving in to a property already owned.
Whilst nobody really likes to contemplate the failure of such a venture, drawing up a Cohabitation Agreement between partners could provide a lot more certainty and save a great deal of money and anguish if things do not quite go to plan.
An agreement that sets out what would happen if partners split up is not an admission that this might happen, any more than the purchase of building insurance suggests that the house will fall down.
In fact, a cohabitation agreement can often strengthen and improve a relationship by helping both partners to feel happier and more secure within it and reflect the special relationship that has brought them together in the first place and the commitment which they have made between them.
• Ewen Campbell is an associate and accredited specialist in family law with Russel + Aitken