The Basics of Cohabitation Agreements in Georgia

Definition of a Cohabitation Agreement

A Cohabitation Agreement is like a marriage contract between non-married individuals living together. Cohabitation agreements outline many of the same legal issues that typically arise in the divorce context for married persons. The primary difference is that people can create, modify, or ratify the provisions of an applicable cohabitation agreement in a manner similar to a marriage contract. In Georgia, the prime statute governing this issue is O.C.G.A. Section 19-9-3. Cohabitation agreements are essentially enforceable contracts between two persons of the same or different gender living together and sharing each other’s lives in a romantic relationship.
Cohabitation agreements are most often signed at the beginning of a cohabiting relationship between two persons. However , these agreements may also be modified by a later agreement or ratification, the former actual execution of the later agreement preceding any divorce. In other words, if two persons execute a cohabitation agreement and later decide to explicitly modify the agreement, the modification will usually be effective, unless done pursuant to a last will and testament. The purpose of a cohabitation agreement is to legally specify fundamental concerns of cohabitant couples while still allowing the parties to terminate the agreement in a manner which is as simple as signing a written document.

Cohabitation Agreements and the Law in Georgia

In Georgia, the ability for an unmarried couple to enter into a cohabitation agreement and have that agreement enforced in court is well established under Georgia law. That said, these agreements can have no presumption of support or alimony following the breakdown of the "marriage like" relationship. However, once the cohabitation agreement is entered into, unless specifically stated otherwise, any property conveyed will be considered "separate property" and not the marital property of the parties. The same rules of evidence apply to the enforcement of the agreement as if the parties were married.
In 1979, the Georgia Supreme Court, in Bishop v. Bishop, 243 Ga. 667, 257 S.E.2d 247 (1979), clearly laid out the requirements that a cohabitation agreement must meet to be upheld, and also ruled that such contracts are enforceable in Georgia courts. The requisite elements pursuant to Georgia law are: 1) voluntary execution; 2) by parties capable of making a contract; 3) not immoral; 4) of definite duration and arising out of an economic relationship between the parties; 5) which deals with economic rights, remedies and liabilities. In Bishop v. Bishop, 257 S.E.2d 247, 248 (1979), the court upheld the validity of a Co-habitation Contract and specifically ruled that the parties, "by their own agreement, may make an economic contract more favorable to a deserted cohabitant than the corollary divorce statutes."
In defending against a claim of an "implied" or "de facto" marriage, Georgia courts have held that contracts between "marriage like" partners are enforceable as long as the four-part test set forth in Bishop v. Bishop is met. Because of the sincerity and intent of the parties when forming the cohabitation contract, Georgia courts will enforce the contract. The agreement will only be unenforceable if the agreement itself appears to be a sham. However, where the consent of one party to the agreement was obtained by concealment of material facts, or it is apparent that the claimant never really intended to fulfill his part of the agreement, any resulting contract may be void. The fact remains that in the absence of evidence to the contrary, cohabitation contracts are valid and enforceable.
If a party to a cohabitation contract dies or the agreement was made prior to full performance of the terms set out in the agreement, the test to determine the enforceability of an alleged cohabitation contract is identical to the present case. Therefore, in order to prevail, a party must demonstrate that the agreement was voluntarily executed, not immoral, not a mere substitute for contract, and that the defendant breached the contract he or she agreed to perform. If this is done, the burden of proof shifts to the defendant to show that the agreement is invalid.
Moreover, as a practical matter, when drafting a contract for a cohabitation relationship, parties should think carefully not only about how to divide assets acquired during the relationship, but also about what type of assets should be divided, and the terms by which they are divided. For example, a couple may not wish to divide the increase in equity on their home. In such cases, the parties may consider dealing with the "spreading the equity" at a certain time or after a certain event occurs (e.g., a child moves out).
Importantly, the Georgia courts have further gone to great lengths to uphold aspects of these contracts that do not violate public policy. For example, the Georgia Supreme Court, in Jordan v. Jordan, 257 Ga. 76, 355 S.E.2d 667 (1987), declined a rationalization of the agreement based on resentment of the fact a person had to provide support to his or her spouse when the relationship ended. Likewise, based on its belief that spousal consortium is of questionable value in a modern social context, the Georgia Supreme Court has upheld agreements waiving the right to spousal consortium. See Davis v. West, 258 Ga. 751, 373 S.E.2d 13 (1988).

Elements of a Cohabitation Agreement

As with any contract, there are key parts that must be included in your cohabitation agreement. Otherwise, it is likely you could misinterpret the clauses at a later date. These parts are as follows:
Financial matters – What happens if a joint bank account goes into overdraft? Or what if one person is fired from their job? What happens if you decide to purchase a piece of real estate before deciding to get married? You need this clause to determine ahead of time what happens.
Property – No one wants to deal with a family law case, so how do you go about obtaining property? This clause is designed to answer that question. Who gets what: a percentage split for each partner, or an option to purchase? This clause could also be called a ‘property settlement’.
Dispute resolution – No matter how much you plan, there is always a chance a dispute will arise. The third clause is aimed at providing the steps you would take to solve issues before they become a divorce or separation. These could be mediation, arbitration or counselling.
Separation agreement – This clause simply details how assets are divided in the case of a split. You can divide up assets in many different ways, whether you are about to separate, or if you become separated. This clause is designed to outline the financial aspects of a separation.
Dispute consider – Again, though your current relationship is sound and you do not see future issues arising, a clause outlining what happens if a future dispute arises can save you a lot of hassle and emotional stress. It is vitally important to outline how you would like the dispute to be handled in writing.

Advantages of a Cohabitation Agreement

The primary benefit of creating a cohabitation agreement is the ability to determine in advance how property will be distributed and alimony awarded in the event that the relationship ends. If the relationship should end without a contract in place, one or both parties could end up suffering financially due to the absence of a valid agreement, especially if there are children involved. A written agreement eliminates any ambiguity and protects the interests of both involved parties.
Another important benefit is bringing clarity to the relationship. Cohabitation agreements are not only about monetary terms. They can also address any other issues that are relevant to the couple, including parenting arrangements, household expenditures and the payment of debts. Having these items spelled out in advance makes it much easier to settle these matters should the cohabiting relationship falter.
Perhaps most important, the agreement creates legal protections for both parties. Not only can a contract protect cohabiting partners in the event that the relationship fails, but it also protects them during the relationship itself. For example, living together as an unmarried couple can have unintended tax consequences, but these can be avoided by clearly stating the parties’ intentions in the agreement. The document can also be used to protect partners from each other’s debts, should one person accumulate significant debt while the other does not.

How to Create a Cohabitation Agreement in Georgia

Cohabitation agreements should include the time and manner in which joint property will be acquired, how much contribution a party is going to be making in terms of expenses and what happens if parties separate or if one of them passes away. Those are basic, but important, things to include when you are contemplating entering into a cohabitation agreement in Georgia.
You need to discuss with your lawyer (if needed) the general rules about what can be included in a cohabitation agreement. Specifically, you need to know that (1) alimony cannot be waived by contract in Georgia; (2) you cannot sign away parental rights by entering into a cohabitation agreement in Georgia; and (3) the financial statements and contractual promises in the agreement can trigger a presumption of a common-law marriage if the couple subsequently marries. In the case of (3), this means that the couple may be considered married, even if they did not formally enter into a marriage.
Once you understand these general rules, many of the other provisions in a cohabitation agreement can be individually negotiated to meet each couple’s specific needs. Keep in mind that both people need to fully and honestly disclose their financial situation to ensure a fair agreement .
However, essentially all cohabitation agreements are similar in that they will address each party’s property and debt, support and estate planning issues. Each agreement will provide a solution for what happens in the event the relationship ends. Many couples use cohabitation agreements for other reasons as well, including for estate planning purposes, clarity of ownership and creditor protection. While I have seen cohabitation agreements that have been beneficial, I have also seen several cohabitation agreements that were written without full disclosure or thought and that did not work out for one or both of the parties. My experience has been that core provisions that should be included in all cohabitation agreements address the following:
The drafting process of cohabitation agreements is one of the most important elements of the agreement. Once a cohabitation agreement is entered into, people cannot change their minds later on and modify it without full and disclosed consent. If you want to protect yourself in the future and use a cohabitation agreement as a vehicle to do so, please consult an experienced family law attorney before crafting your cohabitation agreement.

Cohabitation Agreement Mistakes

One common mistake I see clients make when entering into a cohabitation agreement is not seeking legal advice about the agreement from an experienced attorney. I usually tell clients that one of the reasons they should meet with an attorney is so that their cohabitation agreement will be enforceable. For example, amending the agreement, or changing the agreement can affect the enforceability if done improperly. If one of the parties to the cohabitation agreement enters into the agreement just before getting married with the intent to marry, or enters into an agreement and treats married during the cohabitation period, this could be a problem and the agreement could be overturned if the other partner decides to sue to have it overturned.
Another mistake people make is trying to do this themselves and are not aware of the Georgia case law, how convoluted it is and how tricky it is in order to get a judge to formulate an equitable remedy.
The next common error we have seen as it relates to a cohabitation agreement is that often times people spend a lot of their time and energy relying on the property division aspect of the agreement and spend almost no time thinking about what happens when the relationship ends, whether through death or separation. There needs to be a structured termination clause, which has a lot of detail and safeguards in place that protects the parties in the event there’s a breach of the agreement.
Another critical mistake is not having witness signatures. While yes, Georgia courts haven’t exactly address the issue directly, it is an important aspect of the enforceability factor.

When Should the Cohabitation Agreement Be Updated?

Cohabitation agreements are not set in stone. There are several instances in which a couple should consider making revisions to their existing agreement.
If your relationship status changes, then so should your cohabitation agreement. In Georgia, parties must be legally married to have enforceable spousal support obligations. If you go through the process of marriage, then you will need to draft a new agreement as opposed to amending the existing agreement or replacing the agreement. Your relationship status will dictate what is enforceable and, perhaps more importantly, what is not enforceable.
Relationships often change. When a relationship begins to sour and fight become more common than intimacy, then the agreement should be revisited and updated. A change in your relationship status such as moving into a new location, or simply re-organizing behavior for the sake of improving the relationship , warrants a revision to the agreement.
When a couple decides to have a child or add children to their family this often leads to a re-organization and reevaluation of the relationship. New children means new priorities. That means that an existing agreement should be amended to address new and important priorities.
Several low-end cohabitation agreements will address the receipt of social security benefits. Many cohabitation agreements will also address issues of health insurance, property, and the like. However, some partners will find themselves becoming eligible for a variety of valuable government assistance programs. These assistance programs are often contingent upon the household income or wealth of one or both partners. As a result, revisiting the agreement to account for new assets or income sources is necessary.
Finally, it is not uncommon for partners to live together, get married, separate, and then return to cohabitation. Many couples date before they get married. So why not get married, get separated, and then resume dating? When life circumstances lead a couple to separate, and later return to living together, then an existing agreement should be revised in order to account for the change.