Updated: 2 days ago
Taking the next step and moving in with your partner is an exciting milestone. But while you’re planning furniture layouts and Netflix marathons, don’t overlook the legal side, especially the benefits of a cohabitation agreement.
A cohabitation agreement, usually drafted as a binding financial agreement under Australian family law, can set out what you and your partner agree should happen to certain property and financial resources if your relationship ends.
It’s a practical conversation to have while you’re both on good terms. Whether an agreement is suitable depends on your circumstances, and it must meet legal requirements to be binding.
What Is A Cohabitation Agreement?
"Cohabitation agreement" is a common term for a financial agreement between people who are, or plan to be, in a de facto relationship. These agreements can set out how property and financial resources will be dealt with if the relationship breaks down.
Under the Family Law Act 1975, people can make financial agreements before, during, or after a de facto relationship. Different provisions apply to agreements made before, during or after a marriage.
Cohabitation agreements can be entered into:
Before getting married or entering a de facto relationship (sometimes referred to as a 'pre-nup')
While married or in a de facto relationship
While separating from a spouse (before applying for divorce)
After a de facto relationship breakdown or divorce
Cohabitation agreements can be used in all types of relationships regardless of age, sexuality or wealth, but are particularly valuable when:
One partner has significantly more assets
You or your partner have children from a previous relationship
You're approaching retirement or considering aged care living
What Should A Cohabitation Agreement Include?
Your cohabitation agreement should reflect your unique circumstances and can cover as little or as much as you and your partner want.
Depending on the advice you receive, it may address, a cohabitation agreement may include:
Property and savings each person brings to the relationship
How jointly owned property will be handled (owned, divided or sold)
Financial contributions, including contributions to a home
Superannuation and other financial resources
Inheritances or interests in a family business
How particular assets or liabilities would be dealt with if you separate
Plans for major life events, such as children, death or incapacity
For example, if one partner owns the home you’ll live in, you may want advice on how to record each person’s contributions and what should happen to the property if the relationship ends. The agreement needs to reflect your actual circumstances and intentions.
Get Your Cohabitation Agreement Started Today
If you’re planning to move in together and want advice about a cohabitation agreement, RHC Solicitors’ family law team can discuss your circumstances and explain the next steps.
Are Cohabitation Agreements Legally Binding?
A financial agreement must meet the Family Law Act requirements to be binding.
There are strict requirements which must be met in order for a cohabitation agreement to be legally binding:
The agreement must be signed and dated by both parties
Both parties must receive independent legal advice on their rights and obligations
Both parties must obtain and exchange a statement from their legal adviser confirming that advice was given
The requirements differ depending on whether the agreement relates to a de facto relationship or a marriage. The Federal Circuit and Family Court of Australia explains that financial agreements have technical requirements and recommends getting legal assistance.
Can I Make My Own Cohabitation Agreements Legally?
Because binding financial agreement requirements are technical, each partner should obtain their own legal advice. A template or an agreement drafted without advice may not achieve what either person expects. To learn more about these strict requirements, read our in-depth article on Binding Financial Agreements here.
Drafting one yourself can have serious consequences, and courts may set aside poorly worded or unfair agreements, particularly in cases involving duress, fraud, or unconscionable conduct.
That’s why we strongly recommend engaging a reputable lawyer early in the process to ensure your agreement is properly prepared and fully compliant with the requirements.
A landmark Australian High Court case, Thorne v Kennedy, highlighted how courts can overturn and set aside these types of agreements when these requirements are not met.
What Happens to Property If a De Facto Relationship Ends?
In Australia, de facto couples generally have similar property rights to married couples. However, the key difference is that de facto couples must prove their relationship existed before accessing those rights.
The court considers several factors when determining whether a de facto relationship existed under Section 4AA of the Family Law Act 1975, such as:
How long you’ve been together
Whether you lived together
Financial arrangements and dependence
Ownership of property
Commitment to a shared life
Whether you have or care for children together
Importantly, even if you don't live together for the duration of your relationship, you may still be considered de facto under the law, and your property may be at risk of dispute.
Cohabitation agreements may not suit every couple entering a marriage or de facto relationship, whether because of personal beliefs, religious values, cultural considerations, or other individual circumstances.
We always recommend speaking with a lawyer so they understand your unique relationship and preferred outcomes and can provide appropriate advice.
Can My Ex-Partner Make a Claim on My Property?
A former de facto partner may be able to seek a property settlement if certain legal requirements are met.
This includes:
The relationship lasted for at least two years
You share a child
One partner made substantial contributions (financial and/or non-financial)
The relationship is registered
If a claim proceeds to court, the process can be stressful, costly and time-consuming. The court will assess contributions, identify the property pool (the assets you and your partner own), and determine a division under the Family Law Act 1975.
A well-drafted cohabitation agreement can help you avoid costly disputes and/or court by giving you and your partner a fair, agreed-upon arrangement.
Can a Cohabitation Agreement Be Changed or Ended?
Options for ending a cohabitation agreement depend on the agreement and the parties’ circumstances.
If both partners want to end an agreement, they may be able to make a termination agreement that meets the legal requirements. Get independent legal advice before changing or ending an existing agreement.
If both parties agree, they can also enter into a termination agreement at any stage to formally end the Cohabitation Agreement.
Don’t Wait Until It’s Too Late
Talking about a cohabitation agreement now is the best way to avoid conflict and disputes later. It gives you both clarity, peace of mind, and legal protection if you separate.
At RHC Solicitors, our experienced team can help you prepare a tailored binding cohabitation agreement that meets all legal requirements and protects your interests.
Disclaimer: This publication is not intended to be comprehensive, nor does it constitute legal advice. We are unable to ensure the information is current, and there is no guarantee in relation to accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this publication. The views and/or opinions expressed in this publication are those of the author and may not necessarily represent the views and/or opinions of RHC Solicitors.
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