'No-nups' for cohabiting couples

Couples moving in together can benefit from cohabitation agreements

Once viewed as an unromantic and delicate question to raise with your other half, cohabitation agreements or ‘no-nups’ are now becoming increasingly popular amongst cohabiting couples. A cohabitation agreement allows couples to agree and record their respective rights and responsibilities in relation to the property where they live (or intend to live) together, and confirm ownership of their assets.

Rising housing costs are making it increasingly difficult for first-time buyers to get onto the property ladder. After having struggled to save a deposit, or having received help from family members, cohabitees can be less willing to risk a future argument about the ownership of the property. Cohabitation agreements can be used to record their interests in the property and safeguard their investments.

Advantages of having a well drafted cohabitation agreement in place include:

• Allowing couples to set out the responsibility and division of debts (for example bills, mortgage and credit card payments) and decide how they are going to run their finances.
• Being able to safeguard against any misunderstandings concerning 'who paid what' where a couple is purchasing a property together.
• Helping avoid the uncertainty, acrimony and cost of litigation, if the relationship breaks down and a dispute arises about how the property is owned or what should happen to it.

By consulting a specialist lawyer to prepare a cohabitation agreement, steps can be taken to ensure that the agreement  has a stronger chance of being upheld, and that the parties involved have been fully informed of the consequences if the relationship breaks down. Other legal arrangements, such as mortgages, Wills and trusts may also need to be reviewed to ensure that any agreement will be compatible with them, and this can all be dealt with by the advisor at the same time.

Elizabeth Pearson comments: 

“Many couples will have been saving for a long time to get together the significant amount of money required for a house deposit.  Rather than being perceived as negative, cohabitation agreements should be seen as a positive and practical means for couples to record their contributions and share the costs of living together.”

March 2015