Cohabitation, which is often also referred to as a common law marriage, living together or a domestic partnership, is not recognised as a legal relationship by South African law. There is no law that regulates the rights of parties in a cohabitation relationship. Individuals living together do not have the rights and duties married couples have and is the case irrespective of the duration of the relationship!
The choice of living together in a cohabitation relationship is becoming increasingly common and more and more young and older couples choose not to marry, but to simply live together.
Needlessly to say, it is increasingly important for these couples to consider the financial consequences of their choice to simply live together, to determine and examine their financial contributions and responsibilities within the relationship, the same way in which married (or soon to be married) couples do.
Consider the following questions:
- Are you contributing equally or pro rata to joint expenses?
- How do you deal with the repayment of debts?
- What happens if one of you should pass away?
- Does each of you have a legally valid will in place?
- Have you discussed the division of property in the event of the termination of the relationship?
- Will you be able to prove personal ownership of assets upon the termination of the relationship?
- If any one of the parties in the relationship is financially dependent on the other, have you discussed the issue of maintenance at the termination of the relationship?
Admittedly these are uncomfortable topics to discuss, but nevertheless very important issues which should be discussed openly and honestly, and the outcome of the discussions and agreements reached should be recorded in a written agreement (a Cohabitation Agreement).
Why is it so important to have a Cohabitation Agreement in place?
Because of the lack of legislative regulation and protection of parties to a cohabitation relationship, it is up to the individuals themselves to set the rules and provide for the terms of their respective rights and responsibilities within the relationship.
A Cohabitation Agreement should contain regulations regarding finances during the existence of the cohabitation relationship as well as when the relationship ends. The agreement could deal with the division of property, goods, and assets upon its termination. It may include an express provision for the payment of maintenance upon termination. Provision can be made in the Agreement that if one partner refuses to follow the agreement, the other partner can approach a court for assistance. In most cases, a court will enforce the agreement.
Without an agreement between the parties to the contrary, there is no reciprocal duty of support between partners in a domestic partnership. Cohabitants cannot reclaim monies that they spent on maintaining their partner during the relationship, unless they can make out a case for unjust enrichment. Similarly, donations made between partners in a cohabitation relationship cannot be claimed back by the donor. There is no law that allows for a person’s pension assets to be transferred in a cohabitation partnership.
Cohabitants also cannot bind their partners to contracts with third parties for household goods. Cohabitants who fail to draw up a cohabitation agreement or contract will have no legal protection, unless they can prove the existence of a universal partnership.
The contents and nature of a cohabitation agreement will depend on the needs of the parties. The parties may include any provision in the agreement that is not illegal, against the morals of society or contrary to public policy (as is the case with the drafting of Antenuptial Contracts).
If you are living together with your life partner, and perhaps feel that the “time is not right yet” to enter into a Cohabitation Agreement, please consider the following practical issues:
- South African banks normally do not allow joint accounts for cohabitants. An account will usually be opened in one partner’s name, but giving the other partner co-signing rights. Therefore, the partner in whose name the bank account is, will be liable for any monies owed to the bank in case of an overdraft or loan.
- The Medical Schemes Act 131 of 1998 defines a dependant to include a ‘partner’.
- In terms of the Income Tax Act and the Estate Duty Act, cohabitants are treated as spouses for the purposes of tax legislation, and the word ‘spouse’ is defined to include a permanent same-sex or heterosexual relationship.
- Either partner in a cohabitation relationship may name the other as a beneficiary in a life-insurance policy. The nomination will, however, have to be clear.
- The law does not distinguish between married and unmarried parents regarding the obligation to maintain children. Decisions regarding care and contact are based on what is in the best interests of the child.
- A domestic partner may receive pension fund benefits as a nominee. A domestic partner will, however, not be entitled to their partner’s pension interest on termination of their relationship.
- In the absence of a cohabitation agreement (or a proven universal partnership), private property acquired by the cohabitants prior to their relationship belongs to the partner who originally acquired it, and no community of property can be established. It therefore follows that a cohabitant who is not the owner of the property has no special right to occupy the common home. Cohabitation per se does not give rise to automatic property rights, but the ordinary rules of the law of contract, property and unjustified enrichment might be invoked by cohabitants to enforce their rights.
- When a property is co-owned and registered in both cohabitants’ names, they each have an undivided share in the property and are joint legal owners of the property. They are also both liable for the expenses and losses associated with the running and upkeep of the property. The mortgage bond will be in both their names; thus, they will be jointly and severally liable for paying the bond. If one of the cohabitants paid more than his/her share of the expenses, the difference may be recovered from his/her partner.
- If cohabitants enter a joint lease, they will be jointly liable for the rent.
- There is no right of intestate succession (when someone dies without a will) between domestic partners, no matter how long they have lived together. If the surviving partner is not named in a will, he/she will be faced with having to prove his/her specific contribution to the joint estate before entitlement will be forthcoming.
When two individuals make the decision to move in together, the practical issues should trump the emotional issues and very serious communication should be forthcoming from both partners in laying down the rules by which their financial relationship shall be governed. Take the time to discuss the difficult issues and get the agreement in place, which will undoubtedly provide peace of mind to both partners, and ensure a fair dismantling of affairs should the relationship terminate at some time in the future.
Should you have any additional questions or need assistance with the drafting of a cohabitation agreement, please contact Adv L Oosthuysen on email@example.com.