What is a Cohabitation Agreement?
Cohabitation Agreement: Defined
One area of law that is quickly gaining traction is that of cohabitation rights and obligations. Cohabitation refers to the condition of living together as if married without being often legally married. Put another way, unmarried couples who choose to live in a relationship akin to that of a husband and wife or in a relationship that is to all intents and purposes the same as that of a traditional marriage.
In many cases people will understand the term cohabitants to refer to two people who are not legally married but who are residing together in what most would recognize to be the equivalent of a marriage. Accordingly, it becomes important for unmarried couples to know that the law recognizes rights and obligations between individuals who choose to cohabit in a manner similar to a marital relationship.
A review of the relevant state law regarding cohabitation is insightful. Nevada’s law defines cohabitation as living together as spouses without a valid marriage certificate. Las Vegas law is no exception. In Las Vegas, under NRS 104.1204, spouses are defined as "two people who are legally married to one another by a valid marriage certificate." As such , partners who live together as if they were married may be able to do so under a cohabitation agreement.
Some purposes of a cohabitation agreements is to protect both individuals rights in the event the relationship ends – as with divorce. Specifically a cohabitation agreement can outline the division of property in case of separation or divorce. In addition, a cohabitation agreement can outline provisions for support of children born into a relationship, outline how children from previous relationships will be treated when the couple resides together, and how decisions regarding medical care, finances, etc., will be made.
What Happens if there is no Cohabitation Agreement?
In the absence of a well crafted cohabitation agreement, parties who have simply lived together may find themselves in a precarious position should the relationship end. A Nevada divorce court will have an incredible amount of discretion in determining how assets are distributed, and how debt is assigned, if at all. Without a cohabitation agreement, the court will divide the property and debts of the relationship based on contact and use.
Legal Validity of Cohabitation Agreements in Nevada
To ensure that the contract is legally binding, there are certain legal requirements that must be met. Unlike prenuptial agreements, cohabitation agreements in Nevada do not need to be signed by a notary public. The agreement must be voluntary, meaning that neither party can force the other into signing. In addition, both parties must be considered competent to consent, which means that they must be of sound mind during the entire process; essentially, they must know what they are doing by entering into the relationship and the consequences of their action. Additionally, the agreement must be clear and easy to read; parties should not sign an overly complex or confusing contract that may lead to a misunderstanding of its terms. Parties should carefully review their agreement before signing and even give themselves a few days to discuss the provisions with each other before a final signature is put on the page.
Both parties must also enter into the contract without duress, pressure, or undue influence. In fact, if the agreement is signed while the parties are under the influence of drugs or alcohol, this removes the agreement’s binding power. Parties should also not sign a cohabitation agreement at the last moment before moving in together or after already moving in together; instead, they should do so in advance of the move in date. Cohabitation agreements should be written in a straightforward manner, and each party can have their own lawyer review the document to ensure that they are entering into a contract that is truly beneficial for them.
Advantages of a Cohabitation Agreement
For unmarried couples who are living together, one of the benefits of having a cohabitation agreement is that it can protect assets. There is a common misperception that simply living in the same house with someone or having a long-term relationship entitles you to some rights to property or alimony if the relationship ends. However, Nevada is not like the state of California where the common law marriage has been recognized. So there is no presumption of community property between you and your partner.
If you have been making payments on a property that a partner exclusively used (for example holding title in their name), your cohabitation agreement should provide for remuneration back to you in exchange for your equity in that property. It will also prevent situations such as your partner deciding the give the property to a third party while you were living there.
In the event the property was jointly purchased, your agreement should provide for an alternative method of the property being sold or bought out so that neither is left in a situation of being homeless or having to buy out a disproportionately low equity. In addition, your agreement should address what happens if one of you is responsible for debt payments on credit cards or other financing after your separation. It is not wise to assume that you have any claim against those debts. This is especially important when you have asset protection concerns with regards to future creditors of either party (such as a business owner who has personal guarantees in place for someone else’s business debt).
Your agreement should also make clear what steps the parties should take to divide property in non-judicial means and avoid court involvement if at all possible.
Typical Inclusions in Cohabitation Agreements
The specific provisions that can be included in a cohabitation agreement largely depend on the individuals’ personal circumstances. However, there are several common provisions that are typically featured. First, a cohabitation agreement will generally state how each respective party will own property that is purchased or acquired during the course of the relationship. For example, the agreement may state that all property will be considered marital property, or it may provide for joint ownership in some instances. A cohabitation agreement will also typically address financial obligations. The agreement may specify how living expenses and liabilities will be shared and may even include a percentage split for individual expenses such as groceries or entertainment costs. The agreement may also include a provision dealing with assets that are retained separately, such as certain previously owned property, state and federal tax returns, or other assets that are earned outside the relationship. Further, the agreement should state how any personal property will be disposed of in the event of a separation. It may state that the parties will attempt a mutual negotiation strategy to divide property, or it may provide an alternative such as a broker or a third-party judge. Finally, many cohabitation agreements feature a dispute resolution clause. This clause can provide for mediation or arbitration in the event of a dispute, or it may state that the parties will submit to a non-binding contract to abide by the terms of the agreement.
How to Create a Cohabitation Agreement in Nevada
Before drafting any document, it is wise to discuss your intentions and goals with a legal expert. They will be able to advise you on what protections a cohabitation agreement can actually provide based on the relevant laws and your specific situation. Consult an attorney familiar with the Nevada Uniform Premarital Agreement Act (NRS 123A) and your local family court’s procedures for spousal support.
Once you have educated yourself about the law and consulted with a legal professional, you need to discuss the decision to enter into a cohabitation agreement with your partner. This is a seriously important decision in either a legal or a figurative sense. In other words, there is nothing cavalier about drafting an agreement, and both parties should enter into it with eyes wide open. Like any relationship document, a cohabitation agreement needs to be negotiated, drafted, and reviewed thoroughly before signing. Much like premarital agreements, it is not uncommon for financial disclosures to be made during the process . You should expect to share financial information with each other in order to develop a comprehensive list of assets and financial obligations.
Once a cohabitation agreement has been drafted, both parties need an opportunity to read and understand the document. This requires time to review and digest the document from beginning to end. It is recommended that you take the document to a legal professional for review. Once this step is complete, you and your partner can negotiate any final changes or edits that need to be made. We cannot stress how important it is to carefully review a cohabitation agreement thoroughly before you sign it or live by its terms. If there are any concerns after being presented with the draft agreement, consult with a legal professional to determine whether the concerns are valid and whether there are options to amend the agreement.
In Nevada, cohabitation agreements are governed by the Uniform Premarital Agreement Act (NRS 123A). Nevada courts will enforce a cohabitation agreement so long as it is not executed under duress, is not part of any fraudulent activity, and complies with Nevada laws.
The Role of an Attorney in Cohabitation Agreements
While some couples may believe that hiring an attorney for the drafting of a cohabitation agreement is unnecessary, the reality is that an experienced legal professional can be an invaluable asset in this process. From ensuring the agreement is comprehensive to confirming that it’s enforceable, an attorney can save significant trouble later on down the line.
Drafting a cohabitation agreement is about more than just drafting a relationship contract for determining how assets are divided should the relationship fail. It’s also about setting boundaries between partners and establishing a framework around how the relationship will be organized — including how income is spent, bolstering or weakening asset division agreements.
Working with a Las Vegas divorce attorney is essential to make sure the agreement adequately represents the best interests of both partners, while long avoiding common pitfalls. This is particularly true in states like Nevada, where pro forma agreements are not likely to hold up in court. Without the assistance of a legal professional, a cohabitation agreement may end up doing more harm than good.
An attorney can also ensure that the agreement is balanced: no one should be "winning" at the expense of their partner. While some areas may not appear to be necessary to address (such as religion or fidelity), these provisions hold the potential to ruin any number of partnerships. An attorney will identify what’s needed — and what’s not.
Enforcing a Cohabitation Agreement – and Limitations
Cohabitation agreements are generally enforceable in Nevada but will not be enforced by the court if they:
• The principal purpose of the agreement is sexual immorality.
• The agreement was entered into by fraud, mistake, misrepresentation or duress.
• The agreement contravenes public policy.
• The agreement is unconscionable.
• The agreement is ambiguous, equivocal, or vague on its face.
• The agreement is indefinite and lacks specificity about its benefit.
• The agreement is unenforceable as written under the Statute of Frauds (the written agreement required by law concerning real estate has not been executed).
• The agreement contains an express or implied condition precedent that the supporting spouse finds work and earns a certain amount of money.
• The agreement expressly states that it will not be effective until the parties become qualified for a marriage license.
Cohabitation agreements can be a helpful tool for a person who wants to keep his or her assets away from the court in a divorce or separate maintenance action. Cohabitation agreements may also prove beneficial for the supported spouse who is entitled to support owing to marriage when the agreement provides for continuing support after qualified cohabitation ends. However, the agreement can be used to do the opposite and take assets away from the supported spouse without providing appropriate support. Therefore, the agreements can be abused as well. At times, the agreements may need to be evaluated and challenged depending on the facts of the case.
Final Thoughts – It’s Always Best to Plan Ahead
As discussed in this post , unmarried cohabitating couples do not have the same rights as married couples. It is important for these couples to take a moment to consider whether they should plan and draft a cohabitation agreement to protect their rights regarding property division and support in the event the relationship deteriorates.