Article by Aleksandra Kocelko, Esq.
Many people have heard of a prenuptial agreement, which is a contract entered into in anticipation of marriage. However, more people are living together without a plan or intention to get married. What happens if you buy a house with your significant other but are unmarried? How do you pay expenses together and what happens if you break up? Are you protected? A cohabitation agreement might be the answer.
What is a Cohabitation Agreement? A cohabitation agreement is a contract between two unmarried people in a relationship. It defines property rights, payment of debts, expenses, and other issues. The Agreement can also define how expenses will be paid during the relationship from things like a mortgage or rent, to credit card bills and utilities. The exact terms will vary based on a couple’s particular needs and circumstances. Some of the provisions might even be similar to a prenuptial agreement.
Why would I need a cohabitation agreement? If you live with your significant other, odds are you do not regularly consider what would happen if you break up, but this agreement is meant to provide both of you with the security of knowing how it would be handled. If you own the property you live in, it can define what would happen to that house in the event of a break-up, for example, could one of you buy out the other? How would you pay the mortgage after a break-up? The agreement could also define payment of other shared expenses, joint property or joint debt, or what would happen in the event one of you passes away. This Agreement can be helpful in eliminating future issues. A break-up is usually an emotional and stressful time but having this agreement can at least resolve issues related to the property and financial matters and give you one less thing to argue over.
What happens if you don’t have a Cohabitation Agreement? If you do not, have an agreement prepared and you break up, you likely will end up in a dispute about property, expenses, debt, or other financial issues. At a time when emotions are already high, it might be even more difficult to negotiate these matters and come to a resolution. Having a plan in place puts you both in a position to move forward in the best way possible. Creating a Cohabitation Agreement doesn’t mean you anticipate a break-up or aren’t committed to the relationship, it is just a contract that protects both parties and outlines various rights and responsibilities.
Keep in mind that some people enter into a Cohabitation Agreement now and then use that structure to draft a future prenuptial agreement when and if they marry.
If you are living with your significant other or are considering moving in together, now is a great time to talk to an attorney about a potential agreement, your rights, and how you can protect yourself. Contact one of the experienced family law attorneys with Burns White today!