Asset division makes up a large part of the divorce process, especially when it comes to the family home, which can often be the couple’s largest asset. Because a cohabitating couple doesn’t have this divorce process waiting for them to ensure that assets are equitably distributed, it’s in their best interest to take steps to create a cohabitation agreement to address what will happen to these assets in the event of a breakup.
If the couple buys a house together and there’s a dispute over it, generally the courts under contract law can order the property to be sold and its profits split. A cohabitation agreement, however, can spell out exact terms that the couple agrees to and what should happen to the home in the event of an eventual breakup.
This can include assigning ownership to one of the partners, requiring the other partner to buy out the partner who will stay in the home, an agreement that the home will be sold and division of the proceeds, or any other arrangement that they’re comfortable with. If one partner put in less money for the down payment upon purchase, but put in a great deal of what we call “sweat equity,” renovating the house and partaking in its upkeep, this can be taken into consideration when we’re writing up the terms of a cohabitation agreement. Cohabitation agreements can spell out terms for other types of joint property that you’ve acquired during your relationship as well, from cars that you may have purchased together to artwork and even pets.
Cohabitation agreements can also make it clear which property is not going to be jointly acquired and ultimately divided. Cohabitation agreements can even create terms that apply to how partners operate their household on a day-to-day basis, including how to manage and pay for certain expenses such as housing, food, child care, and utilities.
It’s important to note that these agreements must be in writing and the parties must consult with individual independent counsel in order for the agreement to even be considered enforceable.
Bari Zell Weinberger is the owner and managing partner of Weinberger Law Group in New Jersey. She is Certified by the Supreme Court of New Jersey as a Matrimonial Law Attorney.