Virtually every Alabama resident is aware of the power of a prenup in protecting against financial loss. For those who have not tied the knot but are simply living together, it is easy to assume that a similar level of protection is not available. In reality, however, cohabitation agreements can provide many of the same protections that a prenuptial agreement offers, especially in regard to purchasing a home.
When an unmarried couple buys a house, they are not protected under the set of laws that govern divorce and property division. That means that if they end their romantic relationship and cannot come to terms on how to divide the value of the home, serious legal trouble can result. If one party can make a stronger claim on the home than the other, it is possible that an unfair division of equity can result.
A cohabitation agreement can clearly outline how the home (or any other asset) would be handled in the event of a divorce. For example, if one party came up with the down payment and the other simply pays half of the mortgage and upkeep, the cohabitation agreement could state that the eventual division should be 65 and 35 percent, rather than a straight 50/50 split. An agreement could also address what would occur if only one party wanted to sell the home and the other wished to remain living in the property.
Cohabitation agreements are legally binding contracts. However, in the same way that a prenuptial agreement must be properly drafted and executed, cohabitation agreements must also strictly adhere to the rules regarding contracts. Alabama residents should also know that it is never too late to create a cohabitation agreement, even after the purchase of a home.
Source: theblaze.com, "Cohabiting couples might want to think twice about buying a house together, experts warn", Lois M. Collins, Sept. 19, 2016