Common Law or Common Myth – the Rise of Cohabitation

The number of cohabiting, but unmarried couples is still rising. Many people now choose not to marry - or simply spend time together building a life as an unmarried couple before marriage (or with no plans to marry at all), creating joint financial assets and responsibilities.

There are various reasons for this whether it be financial, cultural or as a result of a previous marriage breaking down.

Common Law marriage

"Common Law" marriage is a term that is used frequently and many people believe that if they have lived with their partner for a number of years that it is the same as being married. This is not correct. No amount of time living with a partner can give the same rights as those couples who are married. Sadly there are many people who have fallen foul of this myth.

What should cohabiting couples do?

It is incredibly important for unmarried couples to consider matters carefully and to ensure that they are aware of the legal position so that there is certainty before making any joint investments together. Cohabiting couples should not rely on a belief of "common law".

It is important that there are open and frank conversations before purchasing a home, or making other investments, so that there is transparency as to what both of your wishes are. If a property is purchased without any clear agreements in place it can be much harder to resolve any issues upon separation. It is much better to tackle these issues head on to try to avoid additional stress and cost in the event of separation at a later date.

Purchasing a home

The biggest investment that is usually made is purchasing a home together which is of course an exciting time within any relationship. However, this also creates a financial tie and joint responsibilities with respect to the mortgage and other household costs.  

It may also be the case that one person is putting more money into the property than the other, or that the property is partly funded by inheritance or a gift from family, and consideration must be given to those issues before the home is purchased.

If a property is purchased in joint names then the presumption will be that the financial interest is joint, which may not be what you wish to achieve. The type of ownership you hold, whether "joint tenants" or "tenants in common" is also important and careful consideration must be given to those issues before the purchase completes. The TR1 document signed in a conveyancing process acts as a deed and holds significant legal weight – trying to move away from this document at a later date could be expensive, stressful and may not be successful.

What if the home is in a sole name?

If the home is purchased in one person's sole name this still does not prevent a claim from being made by a non-owning partner. They can rely on trust principles to establish a claim against the property despite the legal ownership. If a dispute arises at a later date then this can be expensive and time consuming to resolve. You should obtain a clear agreement so that your respective intentions are clear before moving a partner into your home.

How do I protect my position?

You can consider the following to protect/clarify the financial position:

• Take full advice before making any financial investment. It is better to deal with any issues head on and before any formal financial commitments are made.
• Give careful consideration to how you wish to own the property, whether joint tenants or tenants in common, and whether you wish for the interest in the property to be equal or unequal.
• Enter into a declaration of trust – a deed which confirms your respective financial  interests in the property.
• Enter into a cohabitation agreement which sets out your respective intentions. This agreement can go further than a declaration of trust and  make provision for how issues, such as payment of the mortgage and bills, should be dealt with and what should happen in the event of separation. A cohabitation agreement can also be used where a non-owning partner moves into the property to protect your interest and make the intentions absolutely clear to try to prevent any claims being made in the future.
• Make a will – this is incredibly important. Unmarried couples do not have the same rights as married couples and it is vital that you each make a will reflecting your wishes in the unfortunate event of something happened to you.  

What happens if I get married?

Marriage gives rise to much broader financial claims and the legal ownership of a property, and any previous agreements about the financial interest in a property, may not be upheld by the Court on divorce. It is vital to take advice about a nuptial agreement well ahead of the wedding date as marriage changes the legal landscape between you.

What happens if we have children?

Whilst having children in an unmarried relationship does not give rise to financial claims against the other person's assets for the benefit of the other parent, potential claims can still be made under Schedule 1 of the Children Act for financial provision for any dependent children of the relationship, which can include settlement or transfer of property.  

When should I take advice?

• Before purchasing a property with a partner, particularly if you are making unequal financial contributions.
• Before moving a partner into your home.
• Before you get married, if you have any assets that you wish to protect.

You should make a will in all of the above scenarios.

Please contact a member of our family team for advice and support and we will be happy to assist.

Pic: Author Natalie Wiles