The Cohabitation Agreement

Imagine the following scenario.  A 20 year old woman begins living with a married man in a home he already owns outright in his own name.  She knows that there is no prospect that he will marry her. A year or so later, they have their first child together.  They agree that she should give up work to become a full time mother.  Two years later they have their second child.  He persuades her to change her name to his and refers to her to friends and family members as his “wife”.  He works throughout the relationship, paying for all of the household expenses and building up a significant portfolio of investments from his surplus income.

After 25 years the relationship breaks down, and they separate.  She is 45 years old with no real employment prospects and no assets of her own.

Most people would assume that she would have some financial claims against him, whether for a share of the equity in their home, or maintenance, or both.  But under English law, she has no claims at all against him.  Unless her family can help her, or she can somehow find a sufficiently well paid job, she will become dependent on the State for housing and income.

The facts outlined broadly correspond with those in a case heard by the Court of Appeal as long ago as 1983.  Since then, marriage rates have been in steady decline, while the cohabitation rate has increased significantly.  In 1996 there were three million cohabiting couples.  In 2012 the figure had doubled to six million.  The cohabitation rate continues to increase, and yet the law has stood still.

Whilst there have been other momentous changes to the law regulating families, and to the legal definition of marriage itself (first with the introduction of the Civil Partnership Act and more recently with the Marriage (Same Sex Couples) Act), the iniquities faced by cohabitants have been ignored by Parliament.

In 2007, following a lengthy and detailed consultation, the Law Commission recommended law reform granting cohabitants similar (but not identical) rights on separation to divorcing couples.  The then Government politely thanked the Law Commission before completely ignoring its recommendations.   Since then none of the political parties have so much as mentioned cohabitees’ rights, let alone suggested any policy change.

Little wonder that earlier this week, Sir James Munby, the President of the Family Division, put cohabitees’ rights firmly back on the agenda:

“One is aware, anecdotally, of these cases of cohabitation which have lasted 20, 30, 35 years and then breakdown, where there are children in the relationship and where the woman has made precisely the same career sacrifices, precisely the same financial sacrifices as many women do as a consequence of marriage,” he said.

“She may be, to use the vernacular, thrown on the scrapheap, but had the parties been married she would have had a very significant claim to very significant financial relief.”

Sir James Munby is right, it is time to have a debate about the issue. The longer the Government delays this debate, the longer the prospects for cohabitees remains bleak. At the moment their best hope of financial security is to get married but , failing that, we always recommend that clients enter a cohabitation agreement which at least provides some financial provision if the relationship breaks down.

To find out more about how Mishcon de Reya can help with this situation, please click here.