Why invest in a cohabitation agreement?

It is a sad fact of life that relationships break down regardless of initial intentions of happily-ever-after endings.

It is this very aspiration that can prevent couples in love from taking the best steps to protect their investments from an unequal divide should they split.

While married couples have the benefit of all that a nuptial agreement entails, unmarried couples, either heterosexual or homosexual, face a barrage of obstacles in the wake of a breakup if they are not adequately covered.

A cohabitation agreement sets out to cover how the couple would divide their assets if they split up, broaching a range of topics that include joint bank accounts, mortgages, pensions and other items.

While it is not a legally-binding document, a cohabitation agreement still holds a lot of weight in the courts and has more impact than other joint agreements, should a couple decide to go their separate ways.

One of the best ways of illustrating its importance is in the case of Kernott versus Jones - an unmarried couple whose experience through the courts exemplified the many ways in which UK law is failing to deal with relationship breakdowns for cohabiters.

Leonard Kernott was a 51-year-old ice-cream salesman who lived with his partner, 56-year-old Patricia Jones, between the years 1985 and 1993.

In that timeframe the couple had children and used a joint mortgage to purchase a property in Essex.

However, for whatever reason, the relationship broke-down and Mr Kernott left his family and home, using another policy to buy his own property.

In the ensuing 13 years, Ms Jones, a hairdresser, paid the mortgage and raised the kids in their family home.

It is worth noting at this point that both Mr Kernott and Ms Jones had equal shares in the property.

Still, this 50/50 divide became less vivid the longer Mr Kernott was away, with Ms Jones footing the mortgage bill at the end of each month.

By the mid to late noughties, property prices hit a peak and Mr Kernott returned to his previous family home to claim his stake in the value of the house, which by then had accumulated about £245,000.

The battle was not straightforward, with four separate courts all taking varying stances on whom should get what percentage of the value of the home.

Under their initial agreement, a halfway divide seemed amicable, yet Ms Jones’ 13-year payments led some judges to feel she had put more of a stake into the house than her husband, despite both names being on the joint mortgage.

In the end, the Supreme Court took precedence, ruling that Mr Kernott would receive just ten per cent of the property’s worth, with Ms Jones claiming the remaining 90 per cent.

This was not a clear-cut ruling, but its ambiguity arose from the fact there were no indications of what the couple’s true intent was regarding who should take what stake in the event of a break-up.

Judges involved in the proceedings could only make inferences about the couple’s intentions based on their actions, however, little documentary evidence was in place to sway the ruling one way or another.

A cohabitation agreement, typically drawn up before the couple moves in together, would have outlined the couple’s intentions about what should happen in certain circumstances. It is a defence procedure.

Mr Kernott was unsurprisingly displeased with that ruling, as he thought that he was entitled to 25 per cent of the value of the property based on his contributions.

He said at the time: “When I lived there, I paid for everything and I completely refurbished the place. I have been painted as this ogre who walked out on his family.

“I love my family. I didn’t want to leave, but it was made unbearable for me to stay. It’s a sad day for men who are left in a similar position to me and it feels like the law will always side with the woman.”

The issue here was less about which sex the law sided with, and more about what it understood the couple’s original intentions to be.

Get your intentions in writing with Lawpack's solicitor-approved cohabitation agreement template. Available to download.

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Published on: November 25, 2011

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