Cohabitation is a big step in a relationship. You may have just decided to take your relationship to the next level and move in together. Or maybe you’ve been living together for years. But if you’re unmarried and living together, you may put yourself at financial risk if the relationship ends.
It’s important for you to know what a cohabitation agreement is, and how it can protect you.
This blog post will tell you about cohabitation agreements: what they are, why they are important, and how they can help you.
What is a Cohabitation Agreement?
A cohabitation agreement is basically a prenup for an unwed couple that lives together. Like a prenup, the agreement controls what happens in the event of a break-up. This can be uncomfortable. No one wants to think about a break-up, especially when the relationship is going well.
In a divorce case, the law protects spouses in several ways. For example, the court will fairly divide all community property between the spouses. The goal is for each spouse to get their fair share. The court also takes into account what value and services each spouse provided to the marriage. This prevents one spouse from getting a major windfall. Courts don’t want to let one spouse run off with all the money and leave the other spouse with nothing.
Unfortunately, unmarried couples don’t have these kinds of protections. When an unwed couple breaks up, there is no fair division of the couple’s joint property. Courts don’t like mediating arguments between couples outside of a divorce case.
That is where the cohabitation agreement comes in!
You and your significant other are protected by a cohabitation agreement in the event of a break-up. A cohabitation agreement is a legally-binding contract that you can take to court. If there is a disagreement, the court will enforce the agreement if the terms are fair. Having a lawyer draft a cohabitation agreement will make sure that the terms are enforceable.
Interested in a Cohabitation Agreement? Contact us for a free consultation!
Why are Cohabitation Agreements Important?
Today, more unmarried couples live together than ever before. Some people move in together for economic reasons. Some move in together to make sure they are compatible. Courts now recognize the shifting tide in domestic relations. Courts look at cohabitation agreements in a much friendlier light than ever before. Because cohabitation is more common, courts are more familiar with cohabitation agreements. Without a cohabitation agreement, the court treats an unmarried couple as “strangers.”
A cohabitation agreement is a written contract. It has more legal force than an oral agreement. When the terms are concise and in writing, it’s easier to resolve disputes that arise. When a contract is not in writing, parties have to prove they had an agreement. This is very hard. It almost always becomes a “he said; she said” argument. If you can prove that you had an oral agreement, then you have to prove the other party breached. This also can be very difficult to prove in court. It requires a lot of time and money. It can also result in very high attorney’s fees.
Not having a cohabitation agreement is just like only having an oral agreement. Oral agreements are hard to prove. A couple may not be in total agreement on the terms of the agreement. There may be many things the couple did not realize would affect them in the event of a break-up. A couple can have a hard time proving the existence of an agreement after a break-up, especially when emotions are high.
If you can’t overcome the hurdles of proving such an agreement exists, then the law doesn’t offer many remedies. This can leave one member of a couple in a very bad situation in the event of a breakup.
Ending a Relationship without a Cohabitation Agreement
The following scenarios are all too familiar when a relationship ends without a cohabitation agreement. These are situations you should consider before you move in with your significant other:
A. One-income household
You may choose to stay at home while your significant other works and supports both of you. Once you are out of the work force for a while, it can be hard to find a job. That’s potentially years of income you gave up while your significant other supported you. If you break up, will your significant other reimburse you for all of the house work that you did while he or she worked outside the home?
B. Child Care Expenses
Your significant other has children, but they are not biologically yours. You treat them like they are your own children. Seeing yourself as a parental figure to your significant other’s children, you also contribute to child care expenses. in the event of a break-up, will you be reimbursed for these child care expenses? A cohabitation agreement can also help a couple that is beginning to live together to agree on whether one partner will help pay for the other’s child-related expenses.
C. Pets: Who Gets the Dog?
You and your partner celebrate your decision to join households by buying a dog. You treat the dog like it is your child. Both take responsibility for vet costs, grooming costs, and feeding the dog. Unfortunately, your relationship doesn’t last. Who gets the dog? Can there be puppy visitation? Who will be responsible for paying the vet bills?
D. Student Loans
Student loan debt in the United States has topped $1 trillion. Chances are, part of that debt is yours, or your partner’s. You and your significant other move in together to save on living expenses. Because you are a team, your significant other also helps you out with some of your student loan payments. Then, you break up. Your significant other now wants to be reimbursed for all of the student loan payments he made on your behalf. Do you have to pay him back?
Things to Consider including in a Cohabitation Agreement
Here are some other things to consider including in a cohabitation agreement:
- Who will be responsibly for paying medical expenses?
- Will one partner reimburse the other for medical expenses?
- What about helping each other pay for prescriptions?
Rent or Mortgage payments
- Who will be responsible for paying the lease or the mortgage
- Will both partners be named on the lease or mortgage?
- Will both of you contribute to a down payment on a house?
- If there is a break-up, what will happen to the equity in the home? If you rent, who will assume responsibility for the lease?
Cars and other large purchases
- Who will have title to a vehicle purchased during the relationship?
- Who will make payments on car loans, or purchase-money loans for larger items like computers, TVs, or furniture?
- How will you determine which household items belong to whom?
Shared bank accounts
- Do you plan to commingle your bank accounts?
- Will you have a joint checking account?
- Will you have a joint credit card account? Or will you add your significant other as an authorized user to your account?
- In the event of a breakup, how will joint bank accounts be divided?
Debt accumulated during the relationship
- Any debt acquired during the relationship may be under one partner’s name, or both names. Will you and your partner keep your debts separate?
- Will you help each other pay for personal bills?
- Are you aware of your significant others’ creditworthiness?
- Who will be responsible for certain debts if you break up?
- Will you be insured on both your vehicles?
- Whose name will the homeowner’s insurance or renter’s insurance be under?
- Will both of you contribute to the monthly insurance premiums?
In a normal divorce case, the court considers all of these factors. Therefore, divorcing couples have more protections when separating out assets and debts than a cohabiting couple. Without a cohabitation agreement, you’re on your own. If a break-up occurs, these issues can have long-lasting consequences.
It’s easier to work these issues out ahead of time when you and your significant other are still happily in a relationship instead of right after a nasty break-up. If you and your partner remain together, then you probably will never need to resort to this agreement.
A cohabitation agreement is kind of like an insurance policy–it’s better to have it than to bet on most of your savings on your relationship lasting forever, or your significant other not being a jerk in the event you do break up.
My Partner and I Made a Verbal Agreement About What Happens if We Break Up. Isn’t that enough?
Probably not. Break-ups are often emotionally charged. Both partners point the finger at each other, and can easily claim that important conversations never happened. Verbal agreements create a lot of issues in the world of contract law. The main issue is that it’s hard to prove that a verbal agreement existed. It’s also hard to prove that you both agreed to all of the terms of the agreement. When a contract is on paper, there is little ambiguity as to what you agreed to.
Verbal agreements look like a he-said-she-said argument in court. Courts don’t like these. That’s why putting any agreement in writing is always a good choice–especially a cohabitation agreement!
What about Roommates?
Roommates are a different situation. Generally, college roommates may share some expenses, but largely keep their own assets and personal expenses to themselves. When a cohabiting couple lives together, often times they join finances and assets to join their lives together without getting married, or before getting married.
For example, roommates in a rented house or apartment are bound by a lease. That lease is a contract between the landlord and all of the tenants of the house. It governs who is responsible for paying the lease, who must have renter’s insurance, and so on. Oftentimes, roommates are jointly and severally liable for the rent each month. This means that roommates are equally responsible for the rent. If one roommate cannot pay their rent this month, the other roommates must find a way to pay the other’s share for the month to the landlord (or risk eviction for not paying their full rent).
Roommates in a house may choose to have a simple cohabitation agreement regarding common bills, like utility bills.
Do I Need a Lawyer to Write a Cohabitation Agreement?
You technically don’t need a lawyer to write a cohabitation agreement. However, here’s why it’s a good idea:
- Knowledge – A lawyer knows the proper format and language that courts like to see. The last thing you want is for a court to throw out your agreement because it doesn’t conform to proper legal standards.
- Skill – There are many legal formalities in drafting a binding contract of this nature. When these formalities are ignored, the contract may be considered null-and-void in some parts. It may even toss out the entire agreement! Lawyers go to school to learn how to write contracts properly. Having a lawyer write a cohabitation agreement ensures the contract will be valid.
- Protection – There may be circumstances unique to your situation that may need other legal documents to fully protect you. You may want to get a healthcare power of Attorney, a general durable power of attorney, or a will–especially if you have children of your own! A lawyer knows what circumstances to look for, and what other documents should be drafted and executed in these circumstances.
A cohabitation is a good idea for any couple that takes their relationship to the next level and lives together. It protects both of you in the event that the relationship doesn’t work out. It also can help both of you understand how the financial aspects of your relationship will work. Because cohabitation is becoming so common today, it makes sense for couples to take advantage of the benefits and security the law now has to offer.
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