The enquiries and demand for cohabitation agreements have practically doubled during the Covid-19 pandemic - but large numbers of those who have moved in together have risked not protecting their rights in the event that they break up.
Our family law experts have seen record numbers of people taking steps to safeguard their personal finances in case relationships end. But they also fear that a much talked about rise in couples moving in together, earlier than they might otherwise have done to form social bubbles during the pandemic, has created a potential undercurrent of problems should they part ways post-lockdown.
During 2020, double the number of cohabitation agreements have been drawn up for our clients - which set out the rights of those in a relationship - than the year before. And that trend shows no signs of slowing – we have already completed as many agreements so far this year as during the whole of 2019. But, given the social circumstances of the past year, there are fears that many couples who took the plunge during the pandemic may have left things to chance.
Kirsty Martin, a Solicitor in our Family Law team, said: “While we’ve never been busier with cohabitation agreements, we would actually have expected that number to be higher, given the pace at which you hear of relationships having changed during lockdown.
“I’ve heard friends speak of couples who decided to move in together during the pandemic - particularly early on - because they didn’t like the loneliness of lockdown. Everyone can relate to that.
“But there’s a misconception among many that the law views them as man and wife and that they have the same rights as though they’re married. But they don’t.
“That’s worrying. It runs the risk of causing real upset further down the line, particularly for those who decided to buy a home together or if someone who moves in starts contributing to a mortgage, but find the relationship isn’t right for them or even if one person passes away. Having a cohabitation agreement in place removes any confusion.
“It’s hard to say how the relationships will evolve as lockdown restrictions ease. It’s good that we have seen many people take steps to protect themselves, but we think that there are others who should seek peace of mind too.”
Cohabitation law in Scotland means that even a new couple who decide to live with each other are open to one making a financial claim against the other if they separate, however long they have lived together. Cohabitation agreements are tailored to a couple's specific circumstances and lay out exactly what rights each person has in the event of a break-up.
Kirsty added: “It may seem unromantic to discuss the possibility of relationship breakdown when you first buy, but these conversations are best had with a clear head. The emotions involved in a split are unlikely to make the discussions any more reasonable.
“I like to think of a cohabitation agreement as an insurance policy - you hope you never need it, but it’s there if you do. It could avoid a costly and stressful legal dispute.
“Sometimes, when parents are contributing to a deposit, it’s they who are asking for an agreement to protect their child’s share of the investment.”
The numbers of couples cohabiting is understood to have been rising generally in recent years, but the spike in cohabitation agreements being created by our lawyers started as the firm also saw soaring levels of house sales when Covid-19 restrictions on home moves eased in the summer.
Sections 28 and 29 of the Family Law (Scotland) Act 2006 give a former cohabitant the opportunity to make a claim for financial provision from his or her partner when the relationship ends or when one cohabitee dies. A Section 28 claim must be made within one year and a section 29 claim must be made within six months.
People can claim for a capital sum payment based on economic advantage, which can become complicated as soon they start combining finances, such as someone paying towards their partner’s mortgage if they move, or paying towards home renovations in a property in their partner’s sole name.
Lindsays works with organisations including Consensus Scotland to offer relationship advice. For more details go to Consensus Scotland.
CASE STUDY:
Glasgow couple Julie and Peter are unmarried. They had been together for a year when the first Covid-19 lockdown began. They previously thought that it was too soon in their relationship for them to move in together, but they didn’t each want to live alone during the pandemic and bought a house in the summer. Miss Smith paid most of the deposit, thanks to a gift from her parents. Their relationship has now, unfortunately, run into trouble and they are considering parting. But they don’t have a cohabitation agreement in place.
Julie said: “Because I put more in, I thought it went without saying that I would either get all of that back - or a larger share of a sale price - to reflect my investment. But I won’t. I’m now paying solicitors to work out what my next step should be. It’s bad enough that our relationship is breaking up without this stress and expense too. Financially, I don’t know what I’ll do next if I don’t get my full share back. It’s so unfair.”
Solicitor Kirsty Martin said: “One of the most common misunderstandings among partners or friends who buy a home together concerns the case of the unequal deposit. Without a legal agreement specifying what happens with the deposit if they split or sell, they may not get all of it back.
“Relationships and employment both tend to have their ups and downs, and a cohabitation agreement can help deal with the ‘what ifs’. How will you split the mortgage and bills, including if your circumstances change? Will one partner have a buyout option if the other wants to move? What will happen if you both want the buyout option?
“A cohabitation agreement can specify that the person who put in the larger deposit - or pays more of the mortgage - gets back a larger share if you sell.”