Lockdown rush to cohabitation leaves couples lacking financial protections

When the lockdown was announced many couples had to make a rushed decision to move in together or face months apart. It’s unlikely many who took the leap to cohabit will have had time to discuss the details of their combined finances in advance, leaving them without protection in the event of a break-up.

Cohabitation disputes experts at Osbornes Law warn that failing to agree financial terms when moving in together, particularly when one partner owns the home the couple are living in, can store up problems for the future, leaving you out of pocket or even homeless.

Lisa Pepper, family law partner at London law firm Osbornes Law, says: “The lockdown saw many couples move in together sooner than they would have done otherwise, with little thought or discussion about how they would share bills and contribute to the mortgage.

“Six months on, many may still be happily cohabiting in what has now become a permanent arrangement and are unlikely to be concerned about what might happen in the event of their break-up. If one owns the property they are living in, that could leave them open to unexpected claims to a share of the house.  Conversely, if you are the partner who gave up their property and moved in, you could be left with nowhere to go.”

If you are the homeowner and your partner is paying money towards the mortgage or bills, it is important that both partners share an understanding about what that payment is. Is your partner paying rent or are they contributing towards the mortgage?

If the money is rent, then that confers certain rights against them being evicted from the home. It also makes it harder for them to later claim they have acquired an interest in the property.

Lisa explains, “You see cases where a live-in partner claims that they have been paying into the mortgage for years and that although their name is not on the deeds, they are entitled to a share.  Though this can be a hard case to prove, any legal dispute is costly and some exes end up forced to make a ‘nuisance payment’ to settle with their former partner.

“If the partner has made a contribution to putting in a new kitchen, a loft conversion or other significant renovations that have added capital value to the property, they can also argue they have an interest in the property.  The key to protecting yourself is to get something in writing so that any future dispute does not end up being your word against theirs.”

Lisa advises discussing finances with your partner at an early stage and at the very least detailing your agreement in an email. Ideally you would draw up a formal cohabitation agreement.

“You need to have a conversation,“ advises Lisa, “It’s certainly not a very romantic gesture and may not be easy to broach, but if you explain that it is simply an insurance policy that you don’t expect to have to use and that you want to clarify things, your partner should hopefully understand.”

A cohabitation agreement is useful evidence of an agreement between the parties although the law is unclear as to how binding they are.  They generally cover:

• Who owns what and in what proportion
• How you will split your property, personal belongings, assets or joint savings should the relationship break down
• If you have children together, how you will support them over and above any legal requirements
• How you would deal with bank accounts or debts
• How you will manage day to day finances such as rent, mortgage and bills.

To speak to Lisa Pepper or another member of the Family Law team, call 0207 485 8811 or complete an online enquiry form.