What Is a Cohabitation Agreement, and Should You Have One?

Summary

• A cohabitation agreement is a legal contract for unmarried individuals living together, covering property ownership, expense sharing, support rights and more, offering financial protection and clarity.
• Benefits include clear expectations, legal protection, reduced future legal costs and preparation for possible life changes, though some couples may find the process uncomfortable or unnecessary.
• While DIY agreements exist, professional legal review is recommended, especially for complex situations like joint property or children, as verbal agreements are rarely enforceable in disputes. 

When couples move in together, they may not think twice about sharing bills, responsibilities and sometimes even property without ever signing a legal document. But what happens if the relationship ends, or one partner becomes ill or passes away?

That’s where a cohabitation agreement comes in. It’s a legal contract that outlines how two unmarried people who live together handle money, property and shared responsibilities during the relationship and if it ends.

These agreements are often associated with romantic partners but can be used between friends, siblings or other adults sharing a home.

What does a cohabitation agreement cover?

A cohabitation agreement is usually tailored to each person’s situation. It can be as detailed or as simple as you want, but most cover a few areas:

• Property and asset ownership: What’s shared, what’s separate and how things will be divided in case of a breakup or death.
• Debt and bill payment responsibilities: How joint expenses like rent, groceries and utilities get split.
• Financial support and housing rights: Outlines what happens when one partner supports the other financially and how a jointly owned home will be divided if the relationship ends.
• Child arrangements: Custody, support and visitation preferences (if applicable).
• Estate planning basics: What each partner wants to happen with their assets and how this aligns with their will or life insurance policies.
• Pets and shared responsibilities: Determine who takes ownership of pets, vehicles or shared duties like caregiving or home maintenance if the relationship ends.

Without this kind of agreement, resolving financial disputes after a breakup or death could become complicated, especially in states that don’t recognize common-law marriage. 

Why finances are at the core

Money can sometimes be a source of tension in relationships—and that can be even more true when a couple shares expenses but isn’t legally married.

Unlike married couples, unmarried partners don’t automatically have rights to each other’s property or income. If one partner pays off part of the other’s mortgage or co-signs a loan, there’s no automatic claim or recourse if they break up—unless it’s in writing.

For example, if one partner pays $20,000 toward a down payment but isn’t listed on the deed, they could lose that investment entirely without legal documentation.

A cohabitation agreement can help clarify:

• Who owns what before and after moving in
• Whether large, shared purchases (like a car or home) will be jointly owned
• How to split costs fairly (50/50, proportional to income or another method)
• What happens if one partner pays more than their fair share over time

The agreement can also help serve as a financial safety net in case of illness, job loss or death, especially if one person is more financially dependent on the other. 

The pros of a cohabitation agreement

Creating a cohabitation agreement might not seem romantic. But it can provide stability, reduce conflict and may even strengthen your financial partnership.

Here’s what a well-written agreement can do:

• Clarify expectations: You’ll both know who pays for what, how savings are handled, and what’s shared vs. separate. This can help prevent miscommunication and build financial trust between partners.
• Offer legal protection: Are cohabitation agreements legally binding? Yes, in many jurisdictions. The key is that the agreement must be voluntarily signed, include full financial disclosures and meet basic contract law requirements. While enforcement may vary slightly by state, a properly executed agreement is generally upheld in court.
• Reduce legal costs later: If the relationship ends, having a clear plan can reduce the need for litigation or drawn-out legal battles.
• Address future scenarios: Some agreements include clauses for dispute resolution (like mediation) or plans for possible life changes such as children, illness or a move to another state.

Cons to consider

Despite the benefits, sometimes cohabitation agreements aren’t the right fit for all. Or they may not be the right fit right away.

• They require uncomfortable conversations: Discussing money, assets and breakups can feel awkward or stressful. Some couples avoid the topic entirely, even if they could benefit from clear terms.
• May be seen as distrustful: Bringing up a contract might make you feel like you’re anticipating failure. Some couples find that it increases mutual trust once it’s done.
• They’re not one size fits all: Every relationship is different, and so is every state’s laws. You may want to discuss the agreement with a lawyer to ensure it covers everything it should and is tailored to your situation, especially if you own property, have children or live in a state with unclear common-law rules.

Common questions about cohabitation agreements

Still unsure whether a cohabitation agreement is right for you? Here are answers to some of the most frequently asked questions couples may have when considering this type of contract.

How much does a cohabitation agreement cost?

It depends on your location and the complexity of the agreement. Some sample versions may be more affordable through popular online platforms. Working with an attorney could cost upwards of $500. However, this upfront investment could save you more in the long run. You may also need the agreement notarized, which usually costs under $100.

How do you write a cohabitation agreement?

You can create a basic agreement using a reputable legal template. But it’s a good idea to have it reviewed by a local attorney, especially if you own property together or have children. Look for tools that help with joint asset disclosure and clearly outline how each partner is protected.

Is there a way around a cohabitation agreement?

Legally speaking, no. A written contract is usually your best option if you want formal protections. Some couples may choose to avoid an agreement and rely on informal understandings or verbal promises, but this could backfire in a dispute. Courts don’t often recognize unwritten agreements, especially in non-marriage partnerships.

Do we still need a cohabitation agreement if we’re not combining finances?

Ideally, yes. While many couples use a cohabitation agreement to manage shared money, it’s equally helpful even if you’re keeping your finances separate. That’s because the agreement covers more than joint accounts. It can also spell out how you divide bills, handle shared property or protect yourself if one partner contributes to rent or mortgage payments without legal ownership.

Planning now can protect you later

Whether you’re renting an apartment or buying a house, it’s worth considering how to protect both partners’ interests before problems arise. A cohabitation agreement isn’t just about what happens if you break up. It helps you proactively build clarity and protection from the start.

A cohabitation agreement may feel like extra paperwork today, but it could spare you from legal complications, financial loss or emotional stress down the road.