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Why you need a cohabitation agreement when buying property together

We're surrounded by constant talk about how difficult it is to buy a property nowadays. Buying as an individual is near-impossible for many so more and more people are combining their money and buying together, either with a romantic partner or with a friend.

Buying a property with someone else is really exciting and can make you feel like the ultimate dream team. However, amongst all the house hunting and viewings, it’s easy to overlook that you’re actually committing to a serious financial venture together. There are lots of important factors that need to be considered and agreed that worryingly, many people brush over when they’re caught up in the whirlwind of finding and buying a property.

What is a cohabitation agreement?

A cohabitation agreement sets out the arrangements between two or more people who have decided to live together. They tend to be used by partners in a romantic relationship but they are just as effective for friends who have decided to combine their finances to purchase a property together.

Although we’re focusing on how a cohabitation agreement can be used when you’re buying a property with someone else, you should also know that the property concerned can in fact be rented, owned solely by one cohabitee, owned by one or more cohabitees together or with a third party, or owned jointly by cohabitees in equal or unequal shares. Whatever the situation, it can be written into the agreement.

Why you need a cohabitation agreement when you’re buying a property with someone else

A cohabitation agreement will make life easier for you and your fellow buyer, both when you’re looking to buy, whilst you’re living together and if you go your separate ways in the future. It’s the sensible thing to have and in the future you will be thanking yourself for avoiding a lot of wasted money on legal battles if disagreements happen.

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Cohabitation agreements are just one of the things that our family lawyers can assist you with.

Our specialist relationship solicitors have a wealth of experience and are adept and helping people through the some of the most sensitive of life's challenges. Please do let us know if you would like help or support through any family issues that you are facing.

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The drafting of a cohabitation agreement is tailored to your individual situation – there’s no one size fits all. It can record the financial contributions made by both parties for the purchase of the property and stipulate the financial arrangements, for example, setting out who is to pay the mortgage and the bills etc. Having those financial arrangements formally recorded is invaluable and saves any unnecessary confusion when it’s time to pay-up. A cohabitation agreement will clearly record your legal and beneficial ownership of the property, so both of you fully understand how the property is owned.

When the situation changes

Sadly, we all know that both relationships and friendships can turn sour, especially when finances are involved. How many times have you heard the phrase ‘they moved in together and it didn’t work out’? When you live with someone, you see their true colours. Likewise, when you become financially involved with someone, you share a meaningful responsibility and, without a formal arrangement in place, working out where the finances are up to can become confusing and can often be a point of contention.

A cohabitation agreement will set out what is to happen to the property and the proceeds of sale in the event of a separation either:

  • When the relationship comes to an end; or
  • When one of you is ready to move out of the property

If you’re bringing significant items of furniture with you to the property, a cohabitation agreement can confirm what belongs to you, so it’s clear from the outset that whatever you bring with you will also be leaving with you… the grandparents would be gutted if you let go of that antique table that’s been in your family for the last century!

If you’re a couple with children, a cohabitation agreement can set out financial provision to be made for the little ones during and at the end of the relationship. This avoids the need for potentially costly and lengthy legal arguments over who pays for what.

Ultimately, cohabitation agreements ensure everyone knows what’s theirs, what they need to pay for and what they can expect off their partner.

If you’re looking to purchase a property with someone else, or if you have any questions about cohabitation agreements or another aspect of family law please get in touch with one of our specialist Divorce Lawyers who will be happy to chat with you.

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    Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

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