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What is a Cohabitation Agreement?
Over the past ten years, there has been a drastic rise in the number of unmarried partners living together. When unmarried partners cohabitate, they are not subject to the same laws and protections as married couples. As a result, when nonmarried partners split, there can be costly and complicated disputes over property and finances.
To avoid these issues, nonmarried partners have started utilizing cohabitation agreements.
A cohabitation agreement is a legal document, sometimes called a nonmarital agreement, that protects the rights of the couple and ensures financial security for both parties. This written contract is negotiated between the partners and lays out the obligations of each person.
Some of the issues that may be agreed upon within the cohabitation agreement include:
- Property and debt that each person had before moving in together
- Contributions that each partner will make while living together (how much each partner will put towards common bills like rent, utilities, etc.)
- How to divide common property if the couple separates
- How to handle any joint debt if the couple separates
- Will there be alimony if the couple separates
A cohabitation agreement can be valid between same-sex or opposite-sex couples and can include whatever the party’s think is necessary to protect their interests. In the event of separation, or even death, a cohabitation agreement will make it easier to divide property and obligations.
How Do Cohabitation Agreements Work?
A cohabitation agreement is a written contract that can provide nonmarried couples similar protections to married couples. It is similar to prenuptial agreements in that is covers the property and obligations each couple had before beginning to cohabitate.
When two people decide to live together, it is natural that they will begin to comingle obligations and finances. This could be a mortgage or lease agreement, utilities, a car payment, or something as simple as groceries. Without being married or having a legal contract in place, neither party’s interests or investments are protected.
Disputes often arise when a couple separates and there is standing lease agreement or outstanding debt that may have been incurred together. A cohabitation agreement can provide provisions to solve these issues before they even arise.
Before legally drafting the agreement, couples should sit down and agree upon what property belongs to each person and how they would like to divide their assets should a breakup occur. It is always good practice to consult a family lawyer when creating these kinds of contracts to ensure that you are both protected and that the contract follows all legal regulations in your state.
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What’s Included in a Cohabitation Agreement?
One great thing about a cohabitation agreement is that is can be custom tailored to fit the needs of the parties to fully protect them and their property. Below are some examples of provisions and clauses that can be included in a cohabitation agreement.
- Previously Owned Property: Each party should designate what property they brought with them to the relationship. This can include cars, furniture, bank accounts, or even real estate.
- Previously Incurred Debt: The cohabitation agreement should clearly state what kind of debt each party had before moving in together.
- How to Pay Rent/Mortgage: If the couple is going to be cohabitating in a house that one person owns, it should be established whose name is on the deed and who will be responsible for paying the mortgage. If the couple is going to rent, it needs to be decided if both or only one name will go on the lease.
- What Happens to the House/Apartment at Breakup: In the event of a breakup, the couple needs to decide who will continue to live in the house or apartment they are cohabitating in and who will move out. This is fairly easy if only one name is on the deed or lease agreement, but the couple should also establish a timeline to follow if one person must move out.
- Bills, Utilities, Expenses: A cohabitation agreement can include a breakdown of who is responsible for each bill the couple will now incur together. This includes electric, water, cable, groceries, and other joint expenses. If a couple chooses to combine their auto insurance or renter’s insurance that should be addressed as well.
- Children: In some cases, an unmarried couple chooses to live together because they share a child in common. The couple can agree to custody and visitation in their cohabitation agreement in the event they separate. Issues of custody and child support however may not be honored in a cohabitation agreement and may need to be decided separately in court.
- Pets: Disputes over couple’s pets are becoming increasingly popular as more unmarried couples live together without executing a cohabitation agreement. Even though most pet owners consider their furry friends as family, most states consider pets as property. The couple should agree who will keep any pets acquired before and during the relationship in the event of a breakup.
- Property Acquired While Together: A couple will acquire property while together so it should be decided who will get to keep certain property after a separation. Furniture, appliances, joint bank accounts, and even knickknacks, should all be included in a cohabitation agreement.
- Debts Acquired While Together: While living together, a couple may want to make a large purchase like a car. It should be established who will be responsible for this debt if the couple splits.
Like most valid contracts, to be legally binding, a cohabitation agreement needs to include both party’s names and addresses. It needs to be signed by each party and it is a good idea to also have the agreement notarized. Each state handles contracts differently so it is important to follow contract laws in your state to ensure your agreement is legal.
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Who Needs a Cohabitation Agreement?
Not all couples will need a cohabitation agreement and choosing to execute this type of agreement is personal and depends on the relationship. Consider these questions when deciding if you need a cohabitation agreement:
- Are you living with your partner?
- Did either party have a significant amount of property or debt prior to moving in together?
- Do you plan on accumulating a significant amount of property or debt with your partner while living together?
If you answered yes to any of these questions, a cohabitation agreement may be a good option.
Other couples who may want to consider a cohabitation agreement are elderly couples who want to ensure their property is distributed properly upon their death, and couples who want to live together but never plan on getting married.
Are Cohabitation Agreements Legally Binding?
Most states will recognize and uphold a properly executed cohabitation agreement. Whether or not a cohabitation agreement is legally binding will depend on the contract laws in your state and if your agreement abides by those laws.
There are some situations where a cohabitation may not hold up in court like if there are terms in the agreement that are objectively unreasonable or if one party signed under force or duress.
The best way to ensure that your cohabitation agreement is fair, properly executed, and legally binding is to consult with an attorney knowledgeable in contracts or family law. An attorney can assist you with drafting and agreement that meets all the standards and regulations of a valid contract.
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