Cohabitation

12 / 09 / 2017

  • Background/Statistics
  • This is where a couple are living together (either with or without children) and they are not married or in a civil partnership.
  • According to the Office for National Statistics, the number of cohabiting couples has more than doubled in the last 20 years – from 1.5 million to 3.3 million families from 1996 and 2016 respectively.
  • The number of children living with unmarried (cohabiting) parents has also more than doubled in that timeframe.
  • Many people tend to think that there is such a thing as a “common law” marriage and often believe that they have the same rights as those who marry or are in a civil partnership should the cohabitation break down. This is not the case at all. The rights of those in a marriage or civil partnership greatly vary from those who cohabit without marrying or entering into a civil partnership.
  • This has led to various calls to change the law for cohabitants in order to offer them more protection.
  • In 2007, the Law Commission published a report based on this area and made a recommendation that the law should be changed to allow for cohabiting couples – those who were eligible by either having had a child together or had lived together for a minimum period of two years – so that there would be some financial relief upon the separation of those couples by references to the contributions each of them had made to the relationship.
  • Ultimately, however, those recommendations have not been made into law and the rights of cohabitees remain limited, which could mean that individuals will face injustice without a change to the law.
  • There has also been various private members bills proposing reform in this area, yet the law remains as it is.

 

  • Marriage v Cohabitation
  • As alluded to earlier, the law relating to how assets are divided upon the end of a marriage or civil partnership greatly vary to how assets are divided upon the end of a cohabiting relationship.
  • I will use the term “marriage” to refer to both marriage and civil partnerships here.
  • When a marriage ends, the division of assets is governed by matrimonial law, so that both parties have potential financial claims against one another for property, lump sums, spousal maintenance and pensions.
  • If an unmarried, cohabiting couple separate there is not one set of laws covering it, rather a mix of speculative and what can be complex and often costly claims.

 

  • The current remedies for cohabiting couples
  • A cohabiting couple are under no duty to maintain one another. Generally speaking, in the event of separation, each party will keep their own assets. It is a different starting point to that of married, separating couples.
  • Upon separation, cohabiting couples have to resort to property, trust and contract law for remedies which can be complex, uncertain and expensive.

 

Trusts of Land and Appointment of Trustees Act 1996

  • There is the possibility of issuing a claim under the Trusts of Land and Appointment of Trustees Act 1996. This usually involves a dispute over the beneficial ownership and the occupation of a property between two cohabitants.
  • This could be where the property is registered in one person’s sole name and the other believes that they are entitled to a share of it – for example, because they say that they have made financial contributions towards the property or that they say they have acted, to their detriment, on promises made by the property owner.
  • Disputes can also arise where the property has been purchased in both parties names and it needs to be determined who owns what share in the property, whether the property should be sold and if so, when.
  • This can be determined by the Court if no agreement can  be reached.

Schedule 1 of the Children Act 1989

  • Where there are children of the relationship, a claim may also be made under Schedule 1 of the Children Act 1989.
  • It is possible to make a claim for the benefit of a child for a lump sum, periodical payments (e.g. maintenance for the child), although in practice this is not done where the Child Maintenance Service retain jurisdiction, transfer of a property from one parent to another for the benefit of the child or settlement of property.
  • The latter means that the property is “settled” on one parent whilst the child is in their minority with it reverting to the other parent once the child is older.
  • It is really important to note that a claim under Schedule 1 is for the benefit of the child and is not a claim for the parent in their own right and settlement is far more common than the property being transferred outright without reverting to the other parent.
  • This can mean that once the child is older, the parent with whom the child was living could then be homeless.

 

  • Cohabitation – the recommendation
  • A cohabitation agreement can be entered into to set out who owns what and in what proportion; and
  • It can also include how a property, its contents, savings and other assets should be split after a relationship breaks down.
  • In addition, it can include provisions about how the couple’s finances will be managed/dealt with whilst the couple are together – who is to pay what proportion of the mortgage and the bills and the running of any joint account, for example.
  • These should be entered into as a Deed.
  • It is important to note that a Cohabitation Agreement should either set out a Declaration of Trust as to how a jointly property will be divided upon separation, or that a Declaration of Trust is entered into as a separate document.
  • Time will tell whether the recommendations that have been made in relation to changing the law for cohabitees will be implemented; however, as it stands, the law for married couples to that of unmarried couples is very different. A Cohabitation Agreement and/or Declaration of Trust in relation to a property can however go some way to offering a party protection.
  • It is often far cheaper to deal with a Cohabitation Agreement as opposed to arguing about how assets are to be divided once the relationship has already broken down and the parties may not be in the right frame of mind to deal with things rationally or sensibly.

 

Wedlake Bell has extensive experience in dealing with both Cohabitation Agreements and Declaration of Trusts.

In the event of a dispute following the breakdown of a cohabiting relationship, we can also assist with making or defending Trusts of Land and Appointment of Trustees Act 1996 claims, as well as Schedule 1 of the Children Act 1989 claims.