The answer fairly straight-forward – probably all co-habiting couples and particularly in those situations where the parties do not make an equal financial contribution to the purchase. At Ledingham Chalmers we recommend the both parties make a will to ensure some certainty upon the one inevitability in life, which is death. We also consider it good practice to recommend that parties consider signing a formal Co-habitation Agreement which might apply in other circumstances.
We have been asked however – can we act for both parties to this agreement? The Professional Practice Committee of the Law Society has recently amended its guidelines to reflect the consequences of the Civil Partnership Act 2004 and the Family Law (Scotland) Act 2006. The view of the Committee is that, in general, there is a clear conflict and the same solicitor should not advise both parties in relation to a Co-habitation Agreement. While this is likely to result in additional costs for clients, it should be weighed against the downside of not regulating the parties’ respective positions in the event of a separation.
What information might a Co-habitation Agreement contain?
- The price of the property being purchased and the ratio in which the purchase price was contributed by each of the parties.
- The amount of borrowing secured over the property.
- The intentions of the parties regarding future expenditure on improvements.
- On the sale of the property in what proportion and in what priority should the sale proceeds be repaid to the parties after clearing any borrowings.
- If the property purchased will be in the sole name of one of the parties, what benefit will the other party obtain should they separate.
- The treatment of any other jointly held assets.
- What liability each party has for any joint debts.
- A declaration that any pension payments will be made to the surviving party as if the parties had been married to each other.
- A discharge and waiver of all rights which the parties have to make a financial claim against each other arising out of their co-habitation – in other words, making the agreement final and conclusive on all matters which it addresses.
- A declaration that the agreement will be binding upon personal representatives and the executors of any deceased party.
Note - since the Family Law (Scotland) Act 2006 came into force on 4 May 2006, a cohabiting partner who is not a co-owner of the joint residence may apply to the court for the right to occupy the home owned by the other partner. On each application the maximum period granted is six months and can be shorter if the owner chooses to sell before the period expires. By contrast, married or civil (i.e. same sex) couples have the right to occupy the home for the duration of the relationship and this right cannot be defeated by a decision to sell.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.