Cohabitation Agreements

We recently wrote an article highlighting a number of issues affecting cohabiting couples and the dangers of relying on the 'common law marriage' which simply does not exist. The impact of this is that if a cohabiting couple split up, in contrast to a married couple, the cohabiting partners are afforded very little legal protection.

What Is a Cohabitation Agreement?

The purposes of a cohabitation agreement is to formalise any arrangements made between cohabiting couples. In the event that the relationship breaks down, the agreement could address matters such as how you will split your property, its contents, savings and any other assets that may be relevant to the couple. It can also address matters such as how any children will be supported (in excess to any legal requirements), how you will deal with bank accounts or debts and how joint assets will be split.

Preparing a cohabitation agreement can also be an opportunity to formalise and put down on paper day to day arrangements such as how your rent or mortgage will be paid and how bills will be split (if at all).

A cohabitation agreement is legally binding so long as it has been properly effected ie both parties have sought independent legal advice in relation to the agreement.

Why Is It Important?

Perhaps the easiest way of demonstrating the importance of considering your arrangements if you are cohabiting is by looking at an example of when things may go wrong. This happened in the case of Horn v Chipperfield [2019].

Background

Mr Horn and Miss Chipperfield were long term unmarried partners with two children. Throughout the relationship, Mr Horn held various roles including chief executive, managing director and vice president of various companies. Miss Chipperfield worked as a midwife, but reduced to part time hours during the relationship and ceased work completely during the early years of the children's lives.

The couple each owned a property in London which they each subsequently sold in order to purchase a property together for £750,00. Mr Horn contributed £255,000 (plus stamp duty) and Miss Chipperfield contributed £39,000 and the remainder was paid by way of a mortgage in their joint names.

When the parties subsequently separated, Mr Horn claimed that he was entitled to a larger share of the property by virtue of his larger contribution to the property. Miss Chipperfield stated that the parties had discussed that they would own the property together and that it was a joint purchase reflecting their committed relationship and status as a nuclear family. Mr Horn is stated to have said "Well that’s it Chip, we are now 50/50 owners but that means you owe half the debt as well".

Further, it was alleged that instructions were given to the couple's solicitor that indicated that the property should be held under a joint tenancy (ie indicating an intention that the property should be held in equal shares and automatically transferrable to the other on death).

At first instance, the court disagreed with Mr Horn and declared that they held the property in equal shares as tenants in common.

The Appeal

The appeal centred around the conversation in the pub and the instructions to the solicitor. On appeal it was argued that the conversation and instructions were inconsistent with the 'presumption' (as set out in Stack v Dowden [2007]) that the beneficial interest follows the legal title and that the HH Judge Berkely erred in failing to find that the 'presumption' was displaced by the fact that Mr Horn paid the net purchase price, stamp duty and costs out of his own resources. It was argued that the instructions to the conveyancing solicitor were provided on the basis of the division of the property on death - not whilst the parties were alive.

On appeal, the initial findings of HH Judge Berkely were upheld by Mr Justice Freeman. Interestingly, Mr Justice Freeman referred to the following facts as reinforcing the 'presumption':

• the conversation in the pub
• the decision to have joint ownership of the house
• the joint mortgage
• the fact that the home was a family home for the family including the children
• the financial contributions of Miss Chipperfield
• the sacrifices of Miss Chipperfield and
• the overall characterisation of the relationship

Next Steps

The above case provides a good example of when a discussion regarding a cohabitation agreement may have been helpful. For one, it would have been an opportunity for the parties to have discussed their understanding of the situation and cleared up any uncertainty. Secondly, had the parties agreed on the position, this could have been formally recorded as evidence of their intentions and perhaps they could have avoided the high legal fees that they undoubtedly incurred in litigating this matter.

If you would like more details about cohabitation agreements, please contact Sam Hickman in our Family Law & Divorce team on 0117 314 5435 or complete the form below.