Cohabitation vs marriage – are you protected financially?

Posted on: November 18th, 2014

Many people don’t realise that living together as a couple does not give you the same legal rights as married people, and that ‘common-law’ relationships are a myth and don’t exist.  It can mean that even if you have lived and contributed to the relationship in the same way as a married person, you can be left with nothing when the relationship breaks down.

Bryan Scant, a solicitor in the family team at Coffin Mew, explains “Family lawyers have long awaited a change in the law to give financial protection for unmarried couples that are living together but this has not happened, although the recent decision in the case of Southwell v Blackburn has been a step in the right direction. The judge found that an unmarried partner was entitled to a pay out on the basis that she was led to believe she would have the sort of security that a wife would have during the relationship.  Whilst a positive result for her, I do wonder how much she had to spend in legal fees to achieve this.

One of the main problems is awareness.  I purchased a house with my then fiancé in 2013.  Within the rather large packet of documents that we were required to read there was a small section asking whether we wanted to hold the property as ‘joint tenants’ or ‘tenants in common’, and if we wanted to enquire about a declaration of trust. For most couples in a similar situation this should trigger a conversation about how they want to jointly own the property. However in my experience couples are often unaware that the way in which they own the jointly held property, whether as joint tenants or tenants in common, can have a big impact on what happens to the house should the relationship fail.”

Many couples opt to save the extra few hundred pounds and “sort things out between them” rather than paying for an extra document such as a declaration of trust and/or a cohabitation agreement.  Lets face it, the excitement of buying your first property together means that you don’t want to think about the ‘what ifs’ should things go wrong in your relationship.

More worryingly is the situation where one person purchases a property in their sole name, giving reassuring promises to their partner that they will make sure they receive a fair share of the net proceeds of sale.  In this scenario, the person that is not buying the property has often no opportunity to speak to a legal advisor and may not have any idea what their true position in law would be should they break up. 

If you are thinking of purchasing a property with a partner, consider how you intend to hold the property and whether you want to ensure your respective shares are clearly set out using a declaration of trust.  Perhaps also consider having a cohabitation agreement, which is a flexible document that can set out how you intend to manage finances between you for the duration of your relationship and how you would divide assets up should the relationship break down.