What does cohabiting mean?
Cohabitants are defined by s.25 of the Family Law (Scotland) Act 2006 as “a man and a woman who are (or were) living together as if they were husband and wife or two persons of the same sex who are (or were) living together as if they were civil partners”. Further, in terms of s.25, when determining if someone is a cohabitant, the court will consider “the length of the period during which the parties have been living together (or lived together), the nature of their relationship during that period, and the nature and extent of any financial arrangements subsisting, or which subsisted, during that period.”
For a variety of reasons, many couples now choose to cohabit rather than marry. Most recently, we have seen the pandemic acting as a catalyst to some couples moving in together and cohabiting to avoid the isolation and loneliness brought about by the strict stay at home rules and by the restrictions on household mixing. Understandably, many people will have taken this decision to cohabit simply based on protecting their mental health and that of their partner and without realising the legal significance of this step.
Misconceptions about cohabitation
There are, in fact, still some common misconceptions about the legal significance of cohabiting. Some people think that cohabitants have no legal rights and that only married couples benefit from such rights and others think that once you have cohabited for X years, then you are “common law married” and, therefore, have the same rights as married couples. Neither is correct and each is very much an urban myth!
Rights for separating cohabitants
The Family Law (Scotland) Act 2006 brought in rights for separating cohabitants which had not previously existed. In brief terms, these consist of the right of a cohabitant to make a claim for a payment of money to put right any economic disadvantage that they have suffered as a result of the contributions they have made to the relationship, and which disadvantage has not been balanced out by any advantage they have gained from the other party’s contributions. Contributions include both direct contributions such as payments of money and indirect contributions such as restricting one’s career and looking after any children of the relationship. A claim can also be made to ensure that the economic burden of raising any children of the relationship is shared. Any claim must be made within a year of separation.
Rights of separating spouses and civil partner
Accordingly, cohabitants do not have the same rights as spouses or civil partners who separate. The rights of spouses and civil partners are found in the Family Law (Scotland) Act 1985. If a spouse/civil partner separates they are entitled to a fair share of the net matrimonial property which existed at the date of separation. The net matrimonial property is the value of all of the property in existence as at that date (with some exceptions), which is held in either the joint or individual names of the parties, less the corresponding matrimonial debts. This is often shared equally between the parties, however there can be special circumstances justifying an unequal division.
What’s the current situation for cohabitants?
Although some cohabitants feel aggrieved that they do not have the same rights on separation as married couples, the Scottish Government did consult when they were considering the matter of cohabitants’ rights and found that many did not want to be subject to any legislation at all – they had deliberately chosen not to marry and did not want to be burdened with the legal responsibilities that went with it. Therefore, the Government brought in the 2006 Act to avoid injustice and to provide a mechanism for those who had been disadvantaged to seek redress, but they did not go as far as to put cohabitants on an equal footing with married couples in recognition of the results of their consultation process.
What are Cohabitation Agreements used for?
Given that cohabitants do have legal rights on separation, then if you are considering moving in with a partner it is imperative that you take legal advice before you do so. Most couples will benefit from entering a Cohabitation Agreement before they take the step of moving in together. This is a bit like a Pre-Nuptial Agreement into which those planning to marry will often enter before they say, “I do”.
Property rights for cohabiting couples
One of the most common issues that arises when a cohabiting couple separates is that one party has been paying the mortgage on a property in the other party’s sole name. A legal argument will then ensue with the party who has been so contributing seeking a capital sum to reflect the proportionate increase in value in the property, whereas the other party will argue that they were simply paying rent and that they have been advantaged by the relationship in other ways which balances out any disadvantage. The legal costs that accompany these cases is significant. Such costs can be avoided by the parties entering into a Cohabitation Agreement which can set out, for example, who is to pay the mortgage and bills and what, if any, sum will be paid to one of the parties in the event of separation and exactly how that will be calculated.
Another common use of the Cohabitation Agreement is where parties are making unequal contributions to the purchase of a property although it is being taken in joint names. The Agreement can set out what those contributions are and can provide for how the value of the property should be divided in the event of separation e.g. proportionally in accordance with the contributions, or perhaps where there is also a joint mortgage, with the contributions being returned to the parties and any value over and above that being divided equally.
The beauty of the Cohabitation Agreement is that it can also exclude the ability of either cohabitant to make any further claim against the other under the 2006 Act. This gives both cohabitants certainty that in the event that the worst happens, and they split up, they know exactly what will happen as it is all clearly set out in the Agreement. At one of the most stressful times in their lives, they don’t have to worry about the painful process involved in negotiating the matter, or indeed in taking it to court and the hefty legal fees that would be incurred.
If you would like to discuss a cohabitation agreement, please speak to one of our experienced members of the Family Law team.