Will You Regret Not Having a Cohabitation Agreement in Place?

A cohabitation agreement is a type of Binding Financial Agreement and is one of the most practical ways couples can protect themselves before moving in together. For many, the decision to share a home marks a meaningful step in the relationship. Yet alongside the excitement comes the reality of shared bills, blended belongings, and possibly, joint investments. If the relationship ever ends, those same shared assets can become the source of confusion or dispute. 

A cohabitation agreement helps prevent that. It is a legal document between two partners who live together, outlining how assets, debts, and financial responsibilities will be handled during the relationship and if it ends. In Australia, this type of agreement is recognised under the Family Law Act 1975 as a Binding Financial Agreement, and it is available to both married and de facto couples. 

Unlike informal understandings or casual promises, a Binding Financial Agreement offers clear legal protection. It allows couples to decide how property should be divided, what happens to shared purchases, and how financial support will be handled in the event of a breakup. 

These agreements are particularly helpful for couples entering the relationship with unequal assets, for those with children from previous relationships, or for anyone seeking to avoid future disputes. Setting expectations early will allow partners to strengthen their trust and create a foundation of openness and security. Rather than planning for failure, a cohabitation agreement is about taking shared life seriously, with foresight and mutual respect. 

Who Needs a Cohabitation Agreement and Why 

While any couple can benefit from this level of clarity, some people are more likely to need one than others. You should seriously consider a Binding Financial Agreement if: 

• You or your partner have significantly more assets
  If one person owns a home, holds investments, or has substantial savings, the agreement can help ensure those assets remain protected unless both parties agree otherwise. 

• You have children from a previous relationship
  A Binding Financial Agreement can preserve certain assets for your children, helping to avoid inheritance disputes and ensuring your financial obligations to them are respected. 

• You expect to receive an inheritance or are tied to family wealth
  Future inheritances or family-owned businesses can be kept separate through the agreement, especially if relatives are concerned about protecting generational assets. 

• You or your partner have experienced a difficult breakup before
  Those who have previously gone through costly or drawn-out separations often want the reassurance of a clear and binding arrangement from the start of a new relationship. 

• You are buying property or starting a business together
  Significant joint investments add legal and financial complexity. The agreement can outline how ownership, profits, or debts will be handled if the relationship ends. 

• You want to avoid future conflict or confusion
  Even couples with similar assets may prefer to agree on financial arrangements in advance. A written plan helps reduce misunderstandings and supports open communication. 

A cohabitation agreement helps bring structure to your shared life. It is not a sign of mistrust, but a way of respecting each other enough to plan fairly and thoughtfully for the future. 

What Goes Into a Cohabitation Agreement 

While every relationship is different, there are common topics that most agreements address to help avoid confusion or conflict down the track. 

Here are the key elements often included in a Binding Financial Agreement cohabitation agreement: 

• Assets and property ownership
  The agreement should clearly identify what each person owns at the beginning of the relationship. This includes homes, vehicles, superannuation, savings, and other investments. It can also define which assets are to remain separate and which will be shared. 

• Division of property after separation
  If the relationship ends, the agreement should outline how assets and jointly acquired property will be divided. This could involve returning to each party what they brought into the relationship or specifying how shared assets will be split or sold. 

• Debt and liabilities
  Couples can use the agreement to determine who is responsible for existing or future debts. This includes personal loans, mortgages, or joint liabilities that may arise during the relationship. 

• Household expenses and contributions
  Some agreements include how living costs will be shared. This might be equal contributions or a structure based on income or agreed responsibilities. Clarifying this in advance helps avoid misunderstandings over financial expectations. 

• Spousal maintenance (if applicable)
  In some cases, one partner may rely financially on the other. The agreement can include whether either party agrees to provide support if the relationship ends and under what terms. 

• Inheritances and family gifts
  The agreement can specify how future inheritances or gifts from family members will be treated. Often, couples agree to keep these assets separate to respect the intentions of those who provided them. 

• Children from previous relationships
  While child support and custody are determined separately, the agreement can include financial protections for children from previous relationships. This might involve setting aside specific property or assets for their benefit. 

• Other personal considerations
  Some agreements also cover specific arrangements, such as who keeps pets, how disputes will be resolved, or how the agreement will be updated if circumstances change. 

The agreement can be as simple or as detailed as both parties need, it is a reflection of their shared values and mutual respect. 

Is a Binding Financial Agreement Legally Binding? 

A Binding Financial Agreement can be legally binding, but only if it meets specific legal requirements. It is not enough to simply write down intentions and sign. To be enforceable, the agreement must comply with key legal standards under the Family Law Act. 

For the agreement to be valid, the following conditions must be met: 

• It must be in writing and signed by both parties
  Verbal promises or informal understandings carry no legal weight. 

• Each party must receive independent legal advice
  Both partners must engage their own lawyers to explain the terms, implications, and risks of the agreement. One lawyer cannot act for both parties. 

• Each lawyer must provide a signed certificate of advice
  These certificates confirm that legal advice was given and must be attached to the agreement. 

When these requirements are followed, the agreement is generally considered valid and enforceable. However, the court may set it aside in some situations, including: 

• If one party was pressured or coerced into signing 

• If important financial details were withheld 

• If the agreement is significantly unfair or one-sided 

• If circumstances have changed, such as the birth of a child, and the agreement causes serious hardship 

When drafted with care, full disclosure, and proper legal guidance, a cohabitation agreement can provide strong legal protection.  

What Happens Without a Binding Financial Agreement? 

In the absence of a written agreement, the division of assets is decided under general family law principles. A court will need to assess who contributed what, how long the relationship lasted, and what outcome is considered fair. These decisions are often complex, and the result may not reflect either partner’s expectations, especially when only verbal arrangements are in place. 

Ownership disputes are also common. One partner may claim a share of the other’s property, savings, or business interests, even if their name is not on any formal documents. Without clear written terms, these claims can lead to lengthy and costly legal proceedings. Financial and emotional stress can quickly build, particularly when disagreements escalate to court. 

In blended families, the impact of uncertainty may reach beyond the couple. Unclear ownership can interfere with inheritance plans or affect the living arrangements of children. Relatives who have contributed financially, such as parents assisting with a house deposit, may also become involved if those contributions are not clearly documented. 

Couples with shared businesses or investments face additional risks. A separation without an agreement in place can put those assets at risk and create further instability. Even in strong relationships, circumstances can change. When they do, assumptions and informal promises may no longer offer protection. A cohabitation agreement brings clarity and structure, helping each partner avoid unnecessary conflict and safeguard their future. 

Why Clarity Matters Before You Move in Together 

Sharing a home means blending more than furniture and routines, it often means sharing finances, responsibilities, and long-term goals. A Binding Financial Agreement brings structure to that shared life, offering clear boundaries and a sense of security that supports both trust and independence. 

The best time to put these arrangements in place is when things are going well. With clarity around finances, property, and shared responsibilities, couples can move forward with confidence, knowing that they have agreed on fair terms that reflect mutual respect. 

If you are considering a cohabitation agreement, speaking with a qualified family lawyer is your first step. With the right guidance, you can ensure your agreement is legally sound and tailored to your needs, both now and in the future.