Q: Are there any advantages in signing a Cohabitation Agreement?

My boyfriend and I have been dating for over a year and are ready to take the next step by moving in together. We are currently looking for a townhouse to buy. My boyfriend has suggested that he buys the townhouse in his name, seeing as he already has the pre-approval for a bond. He will pay the bond, rates, levies and electricity each month. I will pay for the other household expenses such as the groceries, DSTV, household insurance, the cleaner’s wages and entertainment. I suggested to him that we record this arrangement in a Cohabitation Agreement but he didn’t seem to think that was necessary. Are there any advantages in signing one?   

A:

There are, in fact, many advantages to a Cohabitation Agreement, and it is definitely recommended that you consider signing one.

• The property. One of the most glaring concerns with your proposed arrangement is the split of the expenditure. Your boyfriend will be contributing towards an asset that will increase in value over time. The expenses that you will be paying for constitute, for want of a better description, a “bottomless pit”. They’re necessary monthly expenses, but your contribution isn’t growing any assets. Should your relationship end, for whatever reason, your boyfriend will walk away with the property. His assets will have grown as a direct result of your joint living arrangement, at your expense. To remedy this you can consider either joint ownership of the property, or signing a Cohabitation Agreement that specifies what happens to the property – and the equity in the property – in the event that your relationship terminates.
• Expenses. The Cohabitation Agreement can be used to agree and specify who contributes what to the joint household expenses.
• Proof of the life partnership. A Cohabitation Agreement can also be useful should the need arise for you to prove that you are life partners. It’s the cohabiting couple’s version of a “marriage certificate”. And it may be useful for the likes of insurance claims and medical aid.
• Termination. Every relationship comes to an end eventually. If you don’t split up as a couple, then death will certainly end your relationship. A Cohabitation Agreement can assist you in determining how to apportion assets on termination of the relationship, and can also prove a useful tool for an executor winding up a deceased estate.

In short, a Cohabitation Agreement, also known as a Life Partnership Agreement, should be seriously considered by all couples planning on moving in together.