What is a Cohabitation Agreement?
Cohabitation agreements have become more prevalent in the past two decades in a broader range of family law matters. Whereas they were once primarily used by unmarried couples who wished to obtain a divorce between themselves, they are now also heavily used by same-sex couples seeking rights typically obtained only through marriage. They also are used between unmarried cohabiting couples who do not wish to get married but want to create rights and obligations between them notwithstanding the fact that they are not in a marital relationship.
Because of the fact that these documents may be used in slightly different ways, it is important to note the differences between the agreements most commonly used in family law.
A marriage or civil union is an agreement sanctioned by the state. When a couple enters into a marriage or civil union, the couple is subject to many statutory or court imposed obligations. For example , they must follow the complete set of statutes relating to taxes, bankruptcy, social security and pre-existing or future rights including spousal support.
A cohabitation agreement is generally a document between two unmarried people setting forth obligations or rights between them. For example, if one party purchases a new car, does the other party have any ownership rights in the car? Is the rate of ownership based on how much was paid by each party toward the purchase of the car or is it going to be shared regardless of the amount of down payment or monthly payments made? Should the car be owned jointly between the parties?
There is no requirement of a marriage license, blood test or waiting period for a cohabitation agreement. A divorce, however, may require some form of a waiting period between the time of separation and the time of the divorce.
Advantages of a Cohabitation Agreement
In recent years, there has been an increase in both the number of unmarried couples living together and the length of time those couples remain together. In most states there is still no such thing as a "common law marriage," which requires no formal action to be "in the eyes of the law" married to one another, so unmarried co-parents and live-in partners are often left trying to cobble together something resembling a marriage contract with no clear precedent in law or the courts.
When you have a detailed cohabitation agreement in place prior to living together as an unmarried couple, however, all of that changes. The agreement will clearly set out the financial obligations and responsibilities of each party, usually covering the following:
The decision to move in with a partner without being legally married is becoming more common these days but that doesn’t mean that there is not still a need for a legal framework detailing how things will work, from handling the household bills to addressing the needs of any children they may have together.
There are many benefits to creating a thorough cohabitation agreement with your partner, including:
If the relationship does not work out and a cohabitation agreement is not in place, then many of the issues listed above will be at the heart of any litigation or other dispute settlement process, and one or both parties may bear the financial and emotional costs of not having a legally enforceable contract in place.
Essential Components of a Cohabitation Agreement Form
Every cohabitation agreement should contain certain key elements to ensure both parties are fully aware of their rights and obligations. Among the most critical components of a cohabitation agreement form is language related to property rights. Both parties must be clear on what is considered separate and joint property. This is particularly relevant if a couple separates and the matter ends up in court.
Another important provision typically found in cohabitation agreement forms is financial arrangements. The couple may want to lay out an allocation of joint living expenses or different facets of the house into which they have moved. A couple may choose to divide their financial obligations based on their income, as such an agreement can alleviate future disputes.
A third essential provision often included in a cohabitation agreement form is language concerning dispute resolution. A couple might want to mediate matters pursuant to their cohabitation agreement. The parties may also prefer arbitration. Whatever the preferred method, laying out a dispute resolution option may help avoid future disagreements.
How to Write a Cohabitation Agreement Form
To draft a cohabitation agreement form, you will first need to determine the intentions of you and your partner. If you do not have prior experience drafting contracts, it might be in your best interest to have an attorney assist you with drafting the agreement. Many times, individuals do not adequately protect themselves because they do not take the time to think through the many situations that could arise and end up being too vague with the contract terms. You want to make sure you have adequately covered yourself so that you are protected in future decisions.
Consider what you want to cover in the agreement. Some of the most common provisions that may be covered in the agreement include each party’s contributions to property ownership such as down payments of house or car purchases, how assets and liabilities should be divided in the event that the relationship ends, how property acquired during the relationship will be split, and what will happen if a child is born from the relationship. You will also want to address if one party is responsible for support of the other in the event that the relationship ends.
Additional issues you may want to address include debt accumulation, use of credit, and how credit ratings will be affected by the actions of either party and the timing of the payment on any debt. You will also want to address how decisions should be made under certain circumstances, what to do in case of disagreement, and how to address future situations that may be presented after the agreement is created. Having a neutral third party that can help mediate the drafting process will ensure that both parties’ needs are met. Even though it may be tedious, it is best to talk the process through beforehand so that you can create a strong contract.
Legal Issues with a Cohabitation Agreement
You may think that as an unmarried couple sharing reasonably large assets, you can create a cohabitation agreement form without any legal formalities. In fact, the law is not so straightforward. In California, spouses have certain automatic rights to property acquired during the marriage, which unmarried couples don’t have – unless they create an agreement stating otherwise.
That means that a cohabitation agreement form must reflect that unmarried persons are creating the contract of their own volition. Spouses don’t have to "contract" because they’re already automatically covered by a statutory framework that dictates all the terms. In establishing an agreement, unmarried couples can modify the outcomes provided by California law .
Here are some of the legal issues to consider when creating a cohabitation agreement form:
In California, it’s legally possible to get around the automatic rules for marriage and create your own customized framework by using a cohabitation agreement form. However, the person drawing it up should have good knowledge of California property law and establish the agreement in writing and under circumstances that will hold up in court, even if the parties’ signatures are notarized. The parties should also be aware that some types of things can’t be contracted around, such as child custody, child support, or alimony—so try to keep the focus on the cohabitating couple.
Enforceability of a Cohabitation Agreement
Cohabitation agreements may be enforced in a court of law. When one party to the agreement asks a judge to enforce the terms, the judge will consider several factors. These include what the agreement states, whether it is signed by both parties and if the agreement meets certain standards of a valid contract, including consideration. Consideration in these instances simply means that the party enforcing the contract gave something up in order to gain something from it.
An example of consideration in an agreement is choosing to remain childless so a partner can pursue an education or a career. Because both parties derive some benefit from cohabitation, the agreement is generally seen as valid. Cohabitation agreements often supersede other documents, including prenuptial agreements. In Heintz v. Wiese Poster 2005 BCSC 931, the judge ruled that it was important to uphold the cohabitation agreement because it would be unfair to dictate extra or different provisions. Even if the court found otherwise, a cohabitation agreement takes precedence over all other agreements unless the parties explicitly state otherwise.
In another example set in Idaho, where there are no laws pertaining to civil unions but still allows cohabitating couples to create enforceable cohabitation agreements, the judge ruled (in Vines v. Vines, 744 P.2d 1557 [Idaho 1987]) that in the event of a lawsuit between unmarried individuals the court should review the merits of the case as it would in an action sounding in contract.
Personalizing a Cohabitation Agreement Template
Tailoring a pre-existing agreement template involves a few basic steps:
- Identify the areas relevant to your situation. Many cohabitation agreements contain sections covering property, debts, income, and estate matters. If a particular section is not applicable to your situation (for example, if you are not creating the agreement to address estate matters in case of death) just remove the area from consideration.
- Once you know what layout will be necessary, read over each section to ensure you are familiar with the issues involved. For example, sections on real estate property may cover the possibility of selling it, living together in a period of time, and how best to divide the proceeds. The more complicated an issue gets, the more difficult the language can become.
- Typically, the standard forms contain a lot of legalese. It is a good idea to delete or change words like "hereto", "thereon" and other old English words that have no place in modern writing.
- When customizing content in these agreements, it is best to write in the first person and be specific. Instead of stating "The Parties acknowledge that they each own real estate property," say "Party One owns 1 poplar lane, and he discloses debt in the amount of $6,000 and loan in the amount of $10,500 to Acme Bank."
Consider that many people download many forms over the internet. You may come across a pre-written cohabitation agreement template very similar to yours. However, it may contain language that does not apply to you or may lack any needed sections. If you find the latter, it is a good idea to amend the current version instead of starting fresh.
Cohabitation Agreement Mistakes and Prevention
Creating a cohabitation agreement is an important step for unmarried couples looking to establish their legal rights and obligations. However, some people overlook certain key factors that can lead to invalid agreements. Here are some common mistakes to avoid when drafting a cohabitation agreement form:
Not Consulting an Attorney: Many people choose to draft their own cohabitation agreements without consulting a qualified attorney. This can lead to errors in the form or in the wording of the agreement. It’s important to have an attorney review your agreement to ensure that it complies with the law.
Failing to Disclose Assets: Failing to fully disclose all assets can pose a risk to the enforceability of the agreement. Both parties must fully disclose their assets when drafting the agreement. Otherwise, the agreement may be deemed invalid.
Failing to Update the Agreement: Cohabitation agreements should be reviewed regularly and amended if necessary. Life events such as the birth of a child, a change in employment or a real estate purchase can affect the agreement. Not updating and revising the agreement can render the agreement unenforceable later on.
Ignoring State Laws: Cohabitation agreement laws vary from state to state. Drafting or using a template that is not appropriate for your state may render it unenforceable.
Not Including a Sunset Clause: Without a sunset clause , your agreement can remain in effect indefinitely. A sunset clause outlines specific terms or time frames for the cohabitation agreement. It can also state when the relationship has changed enough to warrant an update of the agreement.
Not including post-relationship terms: Failing to address the terms of finance, property division and debts after separation can turn into legal fights. Clearly defining and addressing these terms within the agreement can save you and your partner from disputes and negotiations later in life.
Here are some tips to avoid costly mistakes:
Consult with a Qualified Attorney: Family law attorneys can help you customize your agreement according to your relationship and your state laws. They can also prevent you from overlooking critical factors when drafting your agreement, which could lead to problems down the road.
Gather Your Information: Before writing up your cohabitation agreement forms, gather all the required information. For example, do you need to separate your finances? Do you need to include who gets your pets? Getting a good idea of what to include in your agreement will help you avoid mistakes when drafting it.
Review Existing Agreements: If you and your partner already have an agreement in place, review it with your attorney to ensure that it remains consistent with your current relationship and is up to date with laws in your state.
Consider Amending Rather than Creating New: You may not need to create a new agreement every time your relationship changes. Many of the times an amendment is sufficient to make changes to your existing agreement.