From the outset of a relationship couples need to be aware of their rights and should seek the appropriate advice before taking any steps which may have a financial consequence if the relationship doesn’t work out.
The term “common law marriage” has been used to describe unmarried cohabiting relationships but couples need to be aware this term offers no legal rights or obligations particularly when it comes to separation.
In reality, a cohabiting partner has no legal right to any asset belonging to the other party unless it is legally owned jointly. Therefore, moving in together does not give either party the right to each other’s assets, no matter the duration of the cohabitation. This can cause issues when one party has made financial or non-financial contributions (i.e. making improvements to the property, payments of rent etc.) to the relationship. Unlike when the parties are married, it is very difficult for an unmarried partner to make any claim against the other for property, maintenance or pension sharing.
Whilst it may be considered pessimistic, couples who intend to cohabitate in a property that belongs to one party or who intend to purchase a property together, should ensure that their intentions are documented in a “Cohabitation Agreement” should they unfortunately separate in the future. Whilst it would not be legally binding, having a record of both parties intentions as to the division of any assets (held jointly or solely) will hopefully reduce or avoid any lengthy disputes.
If there was no prior agreement in place and a dispute arose in relation to a property upon separation, it may be necessary for the Court to decide what is to happen and how the asset is to be split. The Court will look at the intention behind any payments made. For example, did one party make the payments as a gift, loan or payments of rent and was the intention to create an interest in the property? The Court will decipher the extent of the party’s interest in a property and has the power to decide how much a party’s stake in a property is worth. The Court then deals with the property and has a number of ways in which it can divide its value. For example, the Court can order that one party be recompensed for their payments into the property, either via its sale or otherwise.
Unmarried couples with children do have different rights which afford further protection when it comes to property. These rights very much depend on the circumstances of the individual matter but can include that the property be transferred to the parent who is the carer of the child for the benefit of the child.
Rose Kinrade and Dawn Jones have experience in all things Family Law and if you would like to discuss drafting and entering into a Cohabitation Agreement, they will be able to assist and provide you with practical and expert advice.