Solicitor Cameron Shaw discusses the implications of moving in with your partner - and the potential consequences.
So you’ve decided that it’s time to take your relationship to the next level. No, it’s not declaring that you are “in a relationship” on Facebook but that you have decided to take the plunge and move in together.
Sharing a home is one of the biggest steps you can take in any relationship and you may have some questions as to what will happen when you cohabit. For instance:
- Who is a cohabitant?
- What rights will you have as a cohabitant?
- Who will own what?
- What happens if we split up?
So who is a cohabitant?
In legal terms a cohabitant is defined as a man or woman who are (or were) living with a partner as if they were husband or wife or in a same sex marriage.
In terms of determining whether two individuals would be considered to be cohabiting a court would consider:
- the length of time during which the couple lived together
- the nature of their relationship
- the nature and extent of any financial arrangements made during that period
In 2013, the Office of National Statistics announced that the number of cohabiting relationships has increased by 30%. In 2003, there were 2.2 million cohabiting couples in the United Kingdom. In 2009, there were 2.9 million.
On the 4th of May 2006 The Family Law (Scotland) Act 2006 was introduced. This Act introduced new rights for cohabitants in Scotland. One of the purposes of the Act was to reduce the chances of cohabitants being left at a financial disadvantage at the end of their relationship if things go wrong. The Act was introduced to reflect changes in society and the fact that an increasing number of couples are choosing to live together without getting married.
What rights do I have in a cohabiting relationship?
Rights to property or belongings
The Family Law (Scotland) Act 2006 introduced the right for each cohabitant to be presumed to have an equal share in any household goods acquired during the period of cohabitation. Household goods include furniture, white goods, general belongings and domestic equipment. If cohabiting couples cannot agree who owns what, the law assumes that both parties own the goods jointly and must share them, or the value of them, equally. This does not apply to goods acquired by gift or inheritance, to any money (except money lodged in joint accounts), shares or securities, motor vehicles or pets.
Right to apply for financial provision when one cohabitant dies
The act has also introduced the right to apply for financial provision when one cohabitant dies. If one cohabitant dies without a will (intestate) the surviving partner has a right to apply to the court for an award from the deceased’s estate. This can include a capital sum or transfer of a property. Any such claim must be made within six months of the deceased’s death.
Rights to apply for financial provision when a cohabiting relationship breaks down
Section 28 of the Family Law (Scotland) Act 2006 is designed to take account of the financial consequences for each party over the period of their cohabitation and determine whether either partner comes out of the relationship at an economic advantage or disadvantage. This will be defined with reference to gains or losses in capital, income and earning capacity by either party. This means, for example, that if one partner contributes more capital to their shared home, they may be able to make a claim for reimbursement should the relationship end.
In practice anyone claiming financial disadvantage under Section 28 will be required to establish, evidence and quantify that claim. This is in contrast to divorce law, where the usual starting point is to halve the value of assets in the matrimonial pot. Furthermore any claim of financial disadvantage has to be made within 12 months of the end of the period of cohabitation, or the claim will be time barred.
What happens if we split up?
What happens to the flat? Does anyone keep it? If so, who? Does one party buy the other out? If so, for how much? Who values the flat? What price do you accept?
What happens to the furniture? What happens to the dog?
In order to answer these questions and sort out any problems that you may encounter at the end of your relationship, you have a few options. You can talk to your ex-partner and try and resolve matters. You can apply to court as discussed above under Section 28 of the Act, although this can be painful and costly. Or you can insure yourself and your partner against potentially difficult conversations in the future by signing up to a Cohabitation Agreement.
So how do you safeguard your assets if you do split up? If you purchase a property in joint names but there is an unequal split in the deposit then a wise course of action would be to consider a Cohabitation Agreement. A Cohabitation Agreement provides certainty, control, is cost effective and does not bring with it the stress that a court application would. It will protect your own or your parents’ contributions to the property and will provide details of how your shared assets will be divided if you do split up.
If you and your partner enter into a Cohabitation Agreement when you are in a position to talk objectively and what you would wish to happen in the event that you are no longer a couple, it will remove a great deal of stress and almost certainly save you a lot of money if you do break up.
No one likes to think that their relationship may one day have an unhappy ending, but we know that sadly many of us will face break ups and difficulties down the road. Prepare for the worst but hope for the best is a good mantra to consider when thinking about most things, not least such an important decision as moving in with the person you love. A Cohabitation Agreement is a good way of ensuring you are taking care of each other and protecting both of your interests at a time when you are both able to talk about things constructively.
For more information or advice on cohabitant rights, Cohabitation Agreements or other aspects of relationship breakdowns, email Cameron or call 0131 624 6976.