While society has evolved, the legal protections available to cohabitants remain limited and often uncertain.
As a result, cohabitation agreements are a crucial tool in mitigating risk, providing clarity and avoiding costly and unpredictable litigation.
The Legal Position: A Limited and Uncertain Safety Net
Many people assume that living together creates similar rights to marriage. In Scotland, this is not the case. Where separation occurs after cohabitation, parties have access to a potential financial claim under the Family Law (Scotland) Act 2006, but this is limited in scope, discretionary and difficult to predict.
Any claim is based on complex arguments around:
- Financial contributions
- Economic advantage gained by one party (being a gain in capital, income or earning capacity)
- Economic disadvantage suffered by the other (being a loss in capital, income or earning capacity)
The result is uncertainty, both in terms of entitlement and outcome. It also makes settlement negotiations more complex and litigation inherently risky.
Complex, Costly and Unpredictable
Cohabitation claims are usually highly fact-sensitive and evidentially demanding. In many cases, this involves detailed investigation into:
- The extent and nature of parties' financial and non-financial contributions
- Any resulting economic advantage or disadvantage
- A causal link between contributions and financial outcomes
In many cases, these arrangements were informal and undocumented, making proof difficult and disputes more likely. Given the complexity involved, cohabitation disputes can become disproportionately expensive, particularly when compared to the level of financial recovery.
A Practical Solution: Cohabitation Agreements
A cohabitation agreement allows couples to set out, in advance, how financial matters will be managed during their relationship and dealt with if they separate. These agreements can cover:
- Ownership of property
- Contributions to mortgage and household expenses
- Savings and investments
- Responsibility for debts
- Financial arrangements if the relationship ends
The Benefits
- Clarity and Certainty: A cohabitation agreement removes ambiguity by clearly defining each party’s position. This provides reassurance during the relationship and significantly reduces the risk of disagreement later.
- Avoiding Disputes: By addressing potential issues upfront, cohabitation agreements can prevent disputes arising at all and provide a clear framework for resolution if they do. In many cases, this avoids the need for court proceedings entirely.
- Cost-Effective Protection: While there is an initial cost to putting an agreement in place, it is almost always less than the cost of resolving a dispute through litigation. Think of it like an insurance policy, a relatively small investment that can avoid significant expense and stress.
- Looking Ahead: The legal framework means that cohabitants in Scotland cannot rely on the same protections as married couples. While reform is being discussed, the law remains unchanged for now. A cohabitation agreement offers a clear, practical and proactive way to manage risk, providing certainty where the law does not.
How We Can Help
At MFMac, our family law team has extensive experience advising on:
- Drafting tailored cohabitation agreements
- Reviewing and updating existing agreements
- Resolving cohabitation disputes where they arise
If you would like to discuss putting an agreement in place or need advice following a separation, please get in touch with our team.
