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It is a common misapprehension that if you live with someone long enough, your relationship transforms into a ‘common law marriage’ and you acquire the same legal rights over each other’s property and assets as a married couple. However, under UK law, you can only acquire such rights if you marry or enter into a civil partnership.

Unmarried couples have far fewer legal protections and rights than married couples, so it is sensible for any couple moving in together to enter a legal agreement that will clarify the rights and responsibilities each person has regarding their property and finances while they cohabit, and which will dictate what should happen if a dispute arises or one party moves out.

There are two main types of legal agreement that can be used to clarify the intentions of cohabitants, to protect their individual assets, and prevent costly legal disputes:

• a declaration of trust specifically addresses ownership and division of a property or properties (a single document outlines the ownership interests and responsibilities for each property in the portfolio); while
• a cohabitation agreement covers broader financial and personal rights and commitments, such as responsibility for paying bills and for maintenance and repairs, and ownership of shared belongings.

Both of these types of agreement can be used in conjunction with each other and should be drawn up by a solicitor to ensure the agreements are accurate, legally binding, do not contradict each other or any existing will, and reflect the wishes of both parties. In the absence of such agreements, disputes over property and finances can become lengthy, costly, and emotionally draining.

Declaration of trust

A declaration of trust is a legally binding document which clearly states the proportion in which a property is owned and how sale proceeds will be divided. It outlines each cohabitee’s share of the property, including their contributions to the deposit and mortgage, and outlines what happens in different situations such as if one wants to sell their share or if one dies.

A declaration of trust will typically include provisions which outline:

• each party’s initial financial contribution to the deposit;
• how mortgage payments and other outgoings will be shared;
• what occurs when the property is sold, including how the proceeds will be split;
• the procedure for one owner to buy out another’s share of the property; and
• any agreements regarding occupancy rights of the property.

The document must be in writing and signed by all parties involved, with a solicitor drafting or reviewing it to ensure it is a formal deed, includes specific property details, and that all parties signed willingly with full understanding of its implications.

It is a vital tool for any jointly owned property, particularly if one person contributes more financially than another, or if the bank of mum and dad helps you get on the property ladder and they want to ensure the property stays in the family.

A declaration of trust can also be useful if you buy a property alone but wish to grant your partner an interest over time even if their name is not on the title. The trust document can outline that while you are the legal owner, you hold the property on trust for the benefit of your partner, who becomes a ‘beneficiary’. It legally protects their financial contribution, ensuring they receive their entitled share of the property’s value when it is sold, or if the relationship ends.

Conversely, if the property is in your sole name (making you the legal owner) and you want to keep it that way, a declaration of trust can prevent your cohabitee claiming a beneficial ownership in the property and acquiring possible rights to occupy the property or take a share of any rental income or sale proceeds.

This may arise if they claim they contributed towards the mortgage, rather than just paying rent; the declaration of trust will explicitly state that beneficial ownership rests solely with you and the only valid reasons your cohabitee can use to challenge the declaration of trust is if fraud or misrepresentation was involved during its creation.

Cohabitation agreement

A cohabitation agreement can serve as a clear outline for a cohabiting couple’s relationship and is documentation that can be used as evidence if a dispute goes to court after relationship breakdown. It allows each cohabitant to protect their individual financial interests and assets when they move in together, while also clarifying who is responsible for what in the shared property.

As well as the issues covered in a declaration of trust, which generally only relate to  property, a cohabitation agreement can cover a wide range of financial and personal arrangements, such as the ownership of assets and savings, management of finances, insurance and pensions, payment of debts and bills, responsibilities for repairs and maintenance, provisions for children and pets, and next-of-kin arrangements in case of illness or death.

To ensure a cohabitation agreement is legally binding in the UK, it must be drafted as a formal deed, signed by both parties, and entered into freely, without pressure or undue influence. Both partners should obtain independent and separate legal advice and provide full and frank financial disclosure. It is also vital to ensure the agreement is regularly reviewed and updated to reflect significant life changes – otherwise it may be found to be invalid.

How we can help

Cohabitation agreements and declarations of trust are extremely valuable documents and it is important you consult a specialist solicitor to ensure you have the right agreements for your circumstances.

Our expert family lawyers will listen to your requirements, talk you through your options and draw up a document that is accurate, reflects the needs and wishes of both you and your partner and is legally binding.

For further information, please contact one of our Family Law experts today.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.