What is a cohabitation agreement and what should it entail

If you and your partner are living together and sharing responsibilities related to running the household but don’t plan on getting married, you can draw up a cohabitation agreement that formalises your relationship in terms of your responsibilities, finances and assets, and demonstrates your commitment to each other and respect for each other’s rights and welfare. Importantly, if your partner does not abide by the agreement, you can ask the courts to enforce it.

In some ways, a cohabitation agreement is similar to an antenuptial contract drawn up by a couple before marriage, although there are important differences. It is more flexible than an antenuptial contract, which primarily determines a couple’s marital property regime. However, there are limitations on what you can include – for example, you generally cannot use it to override certain statutory rights or include conditions that are unlawful. 

Note that the relationship does not necessarily have to be a romantic one. If you are living under the same roof as, for example, a friend or relative and sharing household duties and expenses, a cohabitation agreement will ensure you know where you stand and what is required of each of you.

What should the agreement cover?

The contents and nature of a cohabitation agreement will depend on the needs and circumstances of the couple in question. It cannot contain anything that is illegal or contrary to public policy, which in South Africa is informed by constitutional values such as fairness, dignity and equality.

The agreement should state that:

• It does not constitute a marriage;
  
  
• It is drawn up by mutual consent.

The agreement should clarify:

• The property owned by each partner, preferably listing each partner’s assets and liabilities at the commencement of the relationship;
  
  
• How property jointly acquired together by the cohabitants during their relationship will be dealt with in the event of the relationship ending;
  
  
• How living expenses are shared and who will be responsible for which expenses;
  
  
• The duration of the agreement and under what circumstances it will end; and
  
  
• What happens on the death of a partner. The provisions in the agreement should align with the provisions in the will of each partner – if the will of a deceased partner is in conflict with the cohabitation agreement, there may be a lengthy court process to determine which version represents the partner’s final wishes.

You may want to go into further detail on living and financial arrangements, such as:

• Home and occupation rights: who pays the bond or rent; and who can remain in the home on separation;
  
  
• Whether bank accounts are kept separate or the parties pool their finances in a joint account;
  
  
• How debts incurred by the parties will be dealt with. Typically, the agreement will state that each party is responsible for his or her own debts;
  
  
• What the arrangements are regarding life insurance policies and retirement funds, taking into account the beneficiary nominations on these products and the fact that retirement fund trustees have the final say in distributions to dependants and beneficiaries. Also note that, unlike in the case of a married couple undergoing a divorce, there is no split of retirement fund assets for cohabiting couples who separate;
  
  
• Whether maintenance will be paid by one party to support the other on the termination of the relationship; and
  
  
• You can include parenting arrangements, but separate laws govern child maintenance, care and contact, which are always subject to the child’s best interests, and parents cannot contract out of these obligations.

What steps must be taken to ensure the agreement is valid?

A cohabitation agreement is legally binding if it meets the following criteria:

• Both partners must enter the agreement freely and voluntarily.
  
  
• The agreement is drawn up and signed by both parties before a notary public (an attorney with the power to witness and authenticate contracts and other legal documents). Note that while privately signed contracts are legally enforceable, it may be difficult to prove their authenticity in court.

The law firm will assign the agreement a “protocol number” and will keep a copy in their files, as would be the case with a will. Note that, unlike an antenuptial contract, the agreement does not get registered at the Deeds Office.

Can the agreement be modified or cancelled?

If the agreement is a notarial cohabitation agreement (with a protocol number), then amendments to it should also be done in consultation with and signed before a notary public. Amendments would typically be necessary if there were significant changes in the lives of the cohabiting partners, such as the birth of children, disability or illness, financial changes such as a loss of income through retrenchment, or if the partners decide to marry or enter a civil union.

The agreement may be cancelled by signing a deed of cancellation, again by mutual consent and in the presence of a notary public.

What are the key differences between cohabitation and antenuptial agreements?

• A cohabitation agreement does not govern the estates of the two partners, as in the case of an antenuptial agreement. It can determine how property jointly owned by the partners or acquired during their relationship is distributed when the relationship ends, but the estates of the partners remain separate.
  
  
• An antenuptial contract does not cover patrimonial benefits, such as spousal maintenance on divorce, which is covered by divorce law. A cohabitation agreement, on the other hand, can include provisions for maintenance on the termination of the relationship.
  
  
• Both agreements can be changed, but to have an antenuptial agreement changed after entering marriage is an involved legal process that requires a court order.

This article was written by Martin Hesse, a freelancer personal finance writer and former editor of Independent Newspaper’s Personal Finance. It was reviewed by Wessel Oosthuizen, head of financial planning at Fiscal Private Client Services and the former director of the Centre for Financial Planning Law at the University of the Free State.