What Defines a Cohabitation Agreement?
A cohabitation agreement is a contract where an unmarried couple outlines their respective rights and obligations as they live together. If you think about why people get married, this document essentially functions as a similar legal construct for unmarried couples. If signed, a cohabitation agreement can outline how two people will treat one another legally, financially, and even with regard to their personal property.
For example, the following can be outlined in a cohabitation agreement: The reality is a lot of couples spend years or decades together and never get married. Cohabiting doesn’t mean you don’t love one another or have a serious relationship . A cohabitation agreement, where recognized, can provide additional legal protections that are beneficial for the couple while also outlining rights and obligations.
When a couple decides it’s time to live together it can be an exciting time, but it can also create some unpleasant legal situations down the road. Do you really know what will happen to your things, your money, and your children when the relationship come to an end?
Careful consideration should be given to asset ownership and other terms that may impact your relationship. Having a contract ahead of time can give you peace of mind, as well as legal protection for the parties involved.
Requirements Under Florida Law
In Florida, the law does not require a specific format or type of document for cohabitation agreements, but the agreement must be in writing and signed by both parties to be legally valid. A verbal or oral cohabitation agreement is not enforceable in a court of law in Florida. The document does not necessarily have to be a formally drafted legal contract; however, it should list the names of both parties and their intent to share a household and form a committed romantic relationship.
The parties should include their signatures, the date of the contract and the date when they first began living together (if applicable). An example of one of the simplest forms of a cohabitation agreement contains a statement such as: "The parties, [name] and [name], agree that they have formed a committed romantic relationship and are currently residing or intend to reside at [address]."
Section 61.10, Florida Statute provides the requirements for the dissolution of a nonmarital agreement. It states that it is enforceable in court if the party against whom enforcement is sought shows the agreement was unconscionable when the agreement was made and that the party against whom enforcement is sought (1) was not provided a fair and reasonable disclosure of the property or financial obligations of the other party; (2) did not voluntarily and expressly waive any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided; or (3) did not have adequate knowledge of the other party’s property or financial obligations.
Essential Components to Address
In order to avoid unwelcome surprises down the road, it is important that the agreement be clear and thorough with attention given to any unique situations for each party. A number of different components should be addressed including but not limited to:
- A legally binding description of how the property in question should be divided in the event the relationship deteriorates.
- A discussion of the financial responsibility of each individual.
- Provisions regarding how real estate and property acquired during the relationship should be handled.
- Financial obligations or provisions regarding children who are living in the home.
- Specific clauses that address individual debts taken on by either party before and during the relationship.
- Outlining of premarital contributions and contributions during the relationship. This is important because during times of separation a party may wish to use separate income for their benefit and may wish to have this clearly stated.
- Protection against excessive spousal support or compensation for one party should the relationship come to an end.
- A clause that addresses any future estrangement by the couple allowing certain assets and responsibilities to be designated at the time of separation.
Advantages of Establishing a Cohabitation Agreement
Cohabitation agreements are premarital agreements designed for couples who are not legally married. Similar to prenuptial agreements, such agreements can set forth how the parties will handle financial matters and other contractual rights in the event they separate or divorce. The benefits of having a cohabitation agreement include the following:
Protection of Individual Assets
A cohabitation agreement provides protection for assets that a party wants to keep as his or her own. For instance, if you own a home prior to entering a relationship, you can avoid having to divide the property in the event you separate or divorce. In addition, the value of the property may be protected if you signed a cohabitation agreement specifying that the home is your own separately owned asset.
Clear Financial Planning
If you are already living with someone prior to marriage, it is wise to insist on a cohabitation agreement that specifies how certain expenses will be handled. Otherwise, you may be giving up some financial independence by paying for bills and expenses in ways that could negatively impact your credit. For instance, if you pay down your joint partner’s credit card, you do so by acquiring joint debt, which could affect your credit in the long run. A cohabitation agreement can specify how financial matters will be handled in advance so that no conflict will arise in the future.
Conflict Resolution
Even in the best relationships, conflicts arise. A cohabitation agreement can help avoid conflict by specifying how certain matters will be handled. For example, the agreement can specify how to divide the contents of the garage if one party owns all the items in the garage while the other party has no interest in them. In the event you separate from each other, the cohabitation agreement can provide instructions for how to handle personal property and shared interests.
Frequently Held Misconceptions
Another common misconception is that oral cohabitation agreements can trump all other agreements. Florida courts do not recognize oral cohabitation agreements as valid contracts, nor do they have any legal status. The public policy considerations that support written agreements for child custody and support also apply to issues of property division. Oral cohabitation agreements are open to interpretation and difficult to enforce, and may ultimately make a bad situation much worse. In short, it is simply better and far more effective for the parties to negotiate the terms of their relationship.
Some people are under the impression that cohabitation agreements are not legally recognized in Florida . In fact, the opposite is true: the Florida courts recognize cohabitation agreements, and consider them an enforceable tool to prevent litigation and reduce the burden on the courts. Cohabitation agreements are treated similarly to pre- and post-nuptial agreements.
Other common misconceptions include the assumption that cohabitation agreements are used primarily by same-sex couples. This is really not the case, as cohabitation agreements are used by broad range of couples, including those who are planning on getting married in the future. Cohabitation agreements allow couples to discuss their finances and decide how their money will be divided before the need to divide the assets arises.
Steps to Create a Cohabitation Agreement
A cohabitation agreement can be drafted much the same way as a postnuptial agreement. Keeping in mind that a cohabitant is not subjected to the same statutory default rules on property rights as a spouse, however, it is necessary to explicitly describe in the cohabitation agreement the intent of the parties. For example, if both parties hold a separate property account to which they each deposit separate funds, but the funds can be used for joint expenses, their intent should be expressed in the agreement.
Similar to drafting a postnuptial agreement, both parties to a cohabitation agreement should separately consult with independent counsel. This ensures that the agreement is entered into voluntarily and understanding the agreement might be useful. See Baer Manor, Inc. v. Flax, 77 So. 2d 627, 629 (Fla. 1955) ("The general rule is that contracts are valid unless against public policy or in contravention of some statute, and the fact that one party to the contract was not represented by counsel does not, in and of itself, render it unenforceable.").
Where an agreement may be found to be against public policy, or otherwise void or voidable, there can be a concern that a court may choose to sever the prohibited terms and enforce the remaining provisions of the agreement. According to Fla. Stat. s. 61.059, any "provision in a prenuptial or postnuptial agreement made in contemplation of marriage" that "purports to limit or restrict the right of a child to support or maintenance for the period after dissolution, dissolution of marriage, or legal separation" is void. Conversely, a cohabitation agreement that contains this type of provision does not violate Florida law and would presumably be enforceable.
Another potential concern is whether the agreement is unconscionable. An agreement will be find unconscionable when it is so unfair to one of the parties that no reasonable person would make it. Since an equity court will not enforce an unconscionable contract, it is best practice to ensure both parties have independent counsel and are provided adequate time to review the agreement prior to signing.
Enforcement and Handling Disputes
Enforceability
In general, courts in Florida will try to enforce a cohabitation agreement. These agreements have been recognized by the courts and (in this author’s opinion) are likely not going away. In an interesting case, Lowry v. Lowry, 495 So. 2d 217 (Fla. 4th DCA 1986), the Fourth District Court of Appeal affirmed an injunction against one partner who refused to vacate real property owned entirely by the other. The injunction was requested by the partner who had smarter legal counsel and entered into a well written cohabitation agreement with a specific sharing of accounts and assets. In that agreement, one partner had agreed to vacate his residence if the relationship ended. Without the documented agreement however, the court would have likely not granted the injunction.
Dispute Resolution
Disputes between cohabitating partners involve all the general issues of divorce: division of property, spousal support, child custody and support. Because the agreements are usually contractual in nature, courts will enforce them or refer the parties to litigation if necessary. Unlike marital agreements, there is no statute in Florida addressing cohabitation agreements for nonmarital partners. However, increasingly, courts have been willing to recognize these contracts in a wide variety of facts and circumstances. Second, with or without a cohabitation agreement, partners can often resolve their disputes through mediation or arbitration. The parties may also seek to enforce any cohabitation agreement through the court system.
When to Revise Your Agreement
It is important to review any existing cohabitation agreements or whether to enter into a new cohabitation agreement when there is a significant life event (i.e. childbirth, adoption, divorce, dissolution of marriage, death) for one or both parties. I also recommend reviewing an existing agreement or deciding whether to enter into a new agreement prior to purchasing a new home , before retiring, and sometimes after selling a business, depending upon the circumstances and the terms of the agreement. Periodic reviews of an existing agreement may be necessary to make sure the agreement continues to meet the needs of both parties because life changes can create new goals, interests and needs.