Exploring Cohabitation Agreements in Pennsylvania

What is a Cohabitation Agreement?

Cohabitation agreements are contracts made by parties who have agreed to live together as a couple but are not married. Cohabitation agreements can provide for division of property and other assets in the event of separation. In addition, these agreements may include provisions for child custody and support, or spousal support. Cohabitation agreements do not allow partners to share in benefits such as insurance, and are not considered equivalent to marriage .
In Pennsylvania, cohabitation agreements cannot be used to circumvent public policy. For instance, people may not use cohabitation agreements to solve certain tax-related or landlord-tenant issues. Pennsylvania family law does not recognize common-law partnerships. For this reason, cohabitation agreements cannot substitute for marriage.

Legal Advantages and Disadvantages

Legal benefits & limitations: Pennsylvania jurisprudence appears to encourage this practice of recognition through agreement. There are some legal limitations on this agreement in the real estate context, however.
As a matter of public policy, parties may contract regarding their rights and obligations as domestic partners. To this end, we have seen parties entered into Cohabitation Agreements; often in the form of a prenuptial agreement. Similar to Marriage Agreements, Cohabitation Agreements and other Premarital Agreements are permitted in Pennsylvania provided they are in the proper form and are not unconscionable. Pennsylvania’s Uniform Premarital Agreement Act does not limit the scope of agreements that may be reached. For this reason, the terms and conditions of a Cohabitation Agreement may address virtually any property or personal issues including, but not limited to a party’s financial responsibilities, title to particular property, the sharing of living expenses, the manner in which funds will be spent or invested and the parties’ responsibility for holding one another harmless in the event of a claim. Because these agreements are premised on the theory of contractual freedom, within constitutional limits, they are generally not subject to judicial support pending a broad determination of unconscionability.
Pennsylvania courts may enforce Cohabitation Agreements as marital agreements. If the Cohabitation Agreement is properly executed and if it is not unconscionable, the Agreement will generally be enforceable. Cohabitation Agreements that are unconscionable include those: (i) where a party forfeits his or her right to alimony; (ii) where a party waives his or her custodial rights; (iii) a waiver of the right to counsel; and (iv) an overly broad waiver of a party’s rights.
Under Pennsylvania law, Cohabitation Agreements may survive the termination of the relationship and the death of a party. Cohabitation Agreements may be imprinted with provisions that survive the termination or expiration of the relationship. Courts will enforce those provisions as long as they do not limit rights given by statute.

Components of a Cohabitation Agreement

A properly executed cohabitation agreement should clearly address the following key components of cohabitation.
Ownership and Division of Property
It is important for parties living in a cohabitation arrangement to address the ownership and division of their property. The agreement should state the ownership and rights to any and all property acquired during the relationship, stating who will retain sole ownership or if the property should be jointly owned. It should also consider how property will be divided in the event of a split up.
Division of Labor and Expenses
Cohabiting partners typically share living and financial expenses, which is one of the primary benefits of the arrangement. A cohabitation agreement can provide a framework on how common expenses will be handled. Will one person pay the rent and the other utilities or will they divide the bills evenly? Will bills be shared equally or will they be based on income?
Joint, Separate and Common Expenses
The parties should also determine what expenses are considered joint, separate and common:
Health Insurance Coverage
The agreement should address health insurance coverage. It should review if one partner will provide insurance for both, or if each party will cover themselves. It should also review the rights of continued coverage under Pennsylvania law.
Tax Filing and Tax Exemptions
It is important for cohabiting partners to discuss how they will file their taxes. Married couples have the luxury of being able to file jointly, which can provide a huge savings. However, unmarried cohabiting partners do not have that option. As such, couples should determine before hand how they will complete their respective yearly tax filings. They should also discuss and agree upon who will claim any dependent children as a tax exemption.

How to Create a Cohabitation Agreement

When making a decision to draft a cohabitation agreement, a couple must take the time to discuss and negotiate all the terms they believe are important for their circumstance. They can review sample agreements or consult with an attorney and discuss previous relationships to make sure all relevant topics are covered, because unlike prenuptial agreements, the parties will not have a court filing date that is the start of the subject relationship. The agreement must be drafted in a manner that indicates the mutual intention of the parties to be legally bound, through the use of appropriate language and signatures. If a couple is not comfortable drafting the agreement on their own, they should enlist the help of an experienced attorney. In addition to peace of mind with the terms of the agreement, this ensures that the agreement will be enforceable in court.

Enforceability in Pennsylvania

Cohabitation agreements entered into prior to marriage, pursuant to 23 Pa C.S.A. 3104 will not be upheld by the Court after a marriage occurs unless a marriage contract exists between the parties or, the agreement is executed with the same formalities as a marital agreement. See the Pennsylvania Superior Court case of Griffith v. Griffith, 759 A2d 925 (Pa. Super. Ct. 2000). In Griffith, an unmarried couple, who lived together for several years, sought a pre-marital property agreement from the family court. The family court refused to enforce the agreement and the Superior Court affirmed. The Superior Court indicated that "other states have held that similar statutes did not affect the validity of modifications of premarital cohabitation agreements between unmarried persons, when such modifications involved solemnizing an informal agreement into a legal marriage . " Griffith, supra at 928. A similar issue was addressed in the Commonwealth Court case of Penn v. Penner, 139 Pa. Commw. 295, 589 A.2d 773 (Pa. Commw. Ct. 1991). The Commonwealth Court held that: "while a cohabitation agreement is enforceable, it cannot include post-marriage activities because of Section 3104 of the Marriage Law which invalidates premarital agreements which fail to meet the statutory requirements of § 3104 of the Marriage Law." Penn, supra at 775. Unenforceable provisions of cohabitation agreements will not form the basis for an "equitable distribution" claim" in the event of the breakup of an unmarried cohabitation. Penn, supra at 775.

Common Pitfalls

One of the common mistakes in creating a cohabitation agreement is thinking that you can simply put language in a contract that states what you would want should something happen in the event of a separation or death. If this language is not prepared legally, you could end up in a long legal battle to prove your intentions. Additionally, you will want to consider the division of property owned before and during your relationship. It’s more than just titles. You’ll need to outline how you either want to continue to own the property or how you would like it divided.
Other mistakes occur when couples don’t use separate lawyers. A cohabiting couple may think that they don’t need legal representation to create an agreement or that they might be able to use the same attorney. But a skilled divorce lawyer will tell you that not only do individuals need separate legal representation, but there are certain times when each party requires separate counsel as well. The reason is that you don’t want one attorney to represent the couple as sound legal advise for you could be a liability for the other. Each party has rights that may jeopardize the other so having two attorneys is imperative, one for each, with the possibility of a third for the couple if needed.
Because you are essentially blending two lives and/or two families, you’ll want to maintain adequate records in regards to each property, including improvements that have been made over the years. If you own property outside of your cohabitation or have family land, you’ll want to put together a valid plan that addresses what happens to the property against which you don’t want to make any claims. And if you plan to have kids, you’ll also want to consider the cost of that child in the case of a break up, especially in reducing the idea of unforeseen circumstances like losing a job, as kids can be quite expensive.
A good lawyer can help you with what you might encounter and how to draft a legally binding cohabitation agreement that covers everything you need it to.

Frequently Asked Questions

We know cohabitation agreements can be confusing, so we compiled some of the most frequently asked questions about cohabitation agreements:
What is a cohabitation agreement?
A cohabitation agreement is a contract between two people who live together and intend to live together long term. The individuals can be the same sex or opposites.
Why do I need a cohabitation agreement?
There are many reasons to have a cohabitation agreement. If you’re moving in with your boyfriend/girlfriend , it’s a good way to protect assets from the other partner. If you want to make sure that assets are divided in a fair manner in the event of a breakup, it’s also a good idea.
I heard cohabitation agreements are not enforceable in Pennsylvania. Is this true?
The individual scenarios vary, but the general answer to this question is no.
What happens if I don’t have a cohabitation agreement?
Division of assets and alimony could become contentious if you did not devise a plan ahead of time before moving in with a romantic partner.