What is a cohabitation agreement?
A cohabitation agreement is a binding contract that sets out how two parties will live together, sharing living expenses and property that they buy together (known as relationship property). It also records what property each of them owned separately beforehand (known as separate property) so that if or when the arrangement ends, the other has no claim over those assets.
A cohabitation agreement is also known as a living together agreement.
Who should use this agreement?
The short answer is that this agreement can be used by two people who have recently moved in together, or who are considering living with each other.
You may or may not be in a sexual relationship with the person you live with. If you are, you need to be aware of the legal rights that both of you will gain after three years of living together. But if you are at an early stage in your relationship, this agreement can be used without worrying about those rights.
So this cohabitation agreement template is ideally suitable for use for apartment or house sharing situations where you are not in a sexual relationship with the other person, or where you have recently moved in with a new partner.
Provided that you meet the requirements for contracting out (explained below), it can also be used by married couples, those in a civil union and those in longer term (or expecting to be in) de facto relationships.
Rights for de facto couples
Under the Property (Relationships) Act 1976, rights arise to partners in a de facto relationship, that is one where an unmarried couple been living with each other in a sexual relationship for at least three years.
These rights are similar to those that a husband and wife or civil union partners have, and include:
- that relationship property such as the family home should be divided equally if the relationship ends (even if it was owned by one person alone before the relationship started); and
- that one might provide financial support or pay maintenance to the other.
So when a couple lives together for more than three years, whether they are married or not, the legal status of their relationship changes.
Section 21 of the Property (Relationships) Act expressly authorises that a husband and wife, parrtners in a civil union, de facto partners, or two persons in contemplation of entering into a marriage, civil union or de facto relationship may opt out (in legal terminology contract out) of the Act's provisions at any time before or during the relationship.
In other words, they can agree to change the rights that the law gives them by default.
If they do this before marriage, they might use a prenuptial agreement, and if they do it just before ending the relationship they might use a separation agreement. If they intend never to marry (or at least not yet), a cohabitation agreement might be used. All three documents can be contracting out agreements.
There are special requirements that must be met for a contracting out agreement to be valid. These are as follows:
- the agreement must be in writing;
- both parties must receive independent legal advice before signing;
- signatures need to be certified by a lawyer; and
- the lawyer must certify that, before that party signed the agreement, the lawyer explained to that party the effect and implications of the agreement.
If you want or need this agreement to be a contracting out agreement, after having received independent legal advice and signing, you should register it at the Family Court.
You don't always need to contract out
A cohabitation agreement usually is used by a couple in a new relationship who are moving in together for the first time (where they might not know whether it will become a de facto relationship), or for two or more people who are not in a sexual relationship, such as housemates.
While this agreement could be a contracting out agreement (for couples who live together long enough for their relationship to become a de facto one), it doesn't have to be one.
If your relationship is not, or will never be a de facto relationship, this cohabitation agreement will be binding in law with just your signatures.
The New Zealand Law Society publishes several pamphlets that give further advice on when to contract out.
What to consider before completing this document
You need to consider what happens during the time you live with each other and what happens when or if the relationship breaks up.
You will probably both want separate property acquired before moving in (and separate debts) to remain owned entirely by the original owner, and shared property bought for the household to be shared equally.
If there is financial dependence by one of you on the other party, then you might like to agree support payments as a formula rather than an exact amount.
You should consider whether, for ease, to set up a joint account for payment of household expenses, and each person's contribution to that account.
If you or your partner have children from a previous relationship, you should also both consider making a last will and testament to control who receives which assets should the relationship ending be by the death of one of you and not because of a break-up.
- How you deal with your house or apartment
- Keeping your own business property
- Separate ownership of assets
- Banking and cash arrangements
- Living expenses
- Finance and borrowing
- Children arrangements - now and on termination
- What happens if / when you separate
- Division of capital assets
- What one of you might pay to the other for self and children
- If one of you dies
- Explanatory notes and guidance