Legal Definitions - cohabitation agreement

A cohabitation agreement is a legally binding contract created by two individuals who live together but are not married. This agreement outlines how they will manage their finances, property, and other assets while they are together, and specifies how these matters would be divided or handled if their relationship were to end. It provides clarity and protection for both partners, addressing issues such as shared expenses, ownership of property, and financial support, tailored specifically for unmarried partners.

Here are some examples of how a cohabitation agreement might be used:

• Example 1: Young Professionals Sharing Expenses

  Sarah, a marketing manager, and David, a software engineer, decide to move into an apartment together. Both have separate savings, student loan debt, and individual investment accounts. They want to share rent and utilities equally but keep their other finances entirely separate. A cohabitation agreement would allow Sarah and David to formally document their understanding regarding shared household expenses, individual financial responsibilities, and how any jointly purchased items (like furniture or appliances) would be handled if they were to separate. This ensures their personal assets and debts remain distinct, providing peace of mind as they build their life together without merging their financial identities.

• Example 2: Protecting Inheritances and Existing Assets

  Maria, a retired teacher with a significant inheritance and a fully paid-off home, decides to live with Robert, a widower who owns a small business and has adult children. They do not intend to marry but want to share their lives. Maria wants to ensure her home and inheritance will pass to her children, and Robert wants to protect his business assets for his own children. Through a cohabitation agreement, Maria and Robert can clearly define that their individual assets, including Maria's home and inheritance and Robert's business, will remain separate property. The agreement can also specify how shared living expenses will be covered without commingling their primary assets, ensuring their respective estates are preserved for their intended beneficiaries.

• Example 3: Joint Property Purchase by Unmarried Partners

  Emily and Alex, an unmarried couple, decide to buy a house together. Emily is contributing a larger down payment from her savings, while Alex plans to contribute more to the monthly mortgage payments and renovations. They want a clear understanding of their respective ownership shares and what would happen to the property if they were to separate or if one of them wanted to sell. A cohabitation agreement would be crucial here. It could detail their initial financial contributions, how ongoing property expenses (mortgage, taxes, maintenance) will be divided, and establish a formula for determining each person's equity in the home. This agreement provides a legal framework for resolving potential disputes over the property's value, sale, or division should their relationship change, protecting both their significant investments.