From childhood sweethearts to cohabiting disaster – do you realise what your other half could be entitled to if you split up?
Did you know that it doesn’t matter if the house is in your name, living together without a cohabitation agreement in place means your ex partner could have a right to a claim against you in the future, as this real life example shows…
Childhood sweethearts Tracy and Gavin were in the same class at school and started going out together when they were both 14. Over the years they got to know each other very well. Tracy knew that Gavin was not good with money – he liked a wee flutter (or sometimes quite a big punt) and he was a bit of a spendthrift. Tracy on the other hand had a good job and was very careful – she saved from her wages every month.
When Tracy was only 23 she had enough money to put down a deposit on a flat. Tracy and Gavin had wanted to move in together for some time but there was no way Tracy was going to marry Gavin. Tracy decided to buy her flat for herself and Gavin would move in with her, although on the strict understanding that they would both look after their own finances and that neither would have any responsibility for the other. They would keep their own bank accounts and each pay a sum of money to the mortgage, bills and food and drink, and that would be it.
Tracy was insistent that they should not get married as she had heard some horror stories from friends about what happened to the property and to money in general when people split up. She wanted to be sure that if that ever did happen Gavin would have no claim against anything that she had worked for and was hers. So they moved in together and were happy for about three months. Tracy had not realised just how much Gavin watched football and drank (at the same time). Gavin had spent every penny he had at the time on a massive new 65-inch HDTV which was his pride and joy. Months past and as they became more familiar with each others habits they slowly drifted apart. After a few (unhappy) years, throughout which time Gavin had continued to pay into the mortgage, they started to enjoy separate social lives and a good while later they eventually separated.
Tracy asked Gavin to leave the flat. It was in her name. She said he had no rights, and as they weren’t married no claim to any money of any kind. Gavin, who was leaving with nothing (while Tracey had everything) found that hard to believe. He consulted a family lawyer. He was told that contrary to what Tracy and Gavin may have thought, despite the fact they weren’t married, it was possible that Gavin did have a financial claim of some sort, particularly as he had been contributing to the mortgage.
During the five years they had lived together the property had increased significantly in value. Gavin’s lawyer told him that it was definitely worthwhile writing to Tracy to try and get some form of payment from her. While there had been a few cases about cohabitation the law wasn’t that clear and it was certainly worth a shot. Tracy took the letter she received from Gavin’s lawyer to her own newly appointed lawyer. She was furious at having to incur the expense. She was also furious that Gavin had the temerity to try and get some money from her. Surely he had no case whatsoever? Her lawyer said that the matter was not necessarily clear-cut. He started going on about economic advantage and disadvantage and to be honest Tracy didn’t understand what his point was. He said that there were laws that governed this situation. Tracy had not realised this. He also said that from a practical point of view defending an action that Gavin might raise would be expensive from a fees point of view and he could not categorically guarantee to her that she would not have to pay anything. After the first meeting with her lawyer (there were to be many more) although she had not understood a lot of what had been said there were two points that she was clear on – firstly, if she had signed a Cohabitation Agreement agreeing with Gavin that neither party would have a claim against the other if they separated then she would have avoided all this hassle. And secondly, that the only ray of sunshine was that she would have some kind of claim against the 65-inch TV that was Gavin’s pride and joy.
Moral of the story… always be prepared. It doesn’t matter who owns the property. Living together without a cohabitation agreement in place means your ex partner could have a right to a claim against you in the future.