If you are going to rent a living space or buy a house together, you must submit a cohabitation contract for the mortgage. It regulates who bears what costs and how far the mutual financial relationship is. In addition, other agreements can be recorded, so that both partners know what is expected of each other. What else does the cohabitation contract entail and what does it contain?
Cohabitation contract
- Necessity to enter into a cohabitation contract
- What is the expense distribution?
- Registration that people live together
- Closing at the notary
- Taxation
- Principles for breaking up
- The residence clause in the event of death
Necessity to enter into a cohabitation contract
Anyone who starts living together without being married to maintain a long-term relationship will have to deal with it. The mutual contract establishes how people interact with each other in the relationship and how the financial burden is divided. So what are the mutual rights and obligations regarding cohabitation? The household can demand a lot from the joint income with a mortgage loan, so it must be recorded who bears what costs. The basic principle is that both partners bear an equal share of the expenses in proportion to their income. It is certainly a requirement if one takes out large loans based on the financial scope of the total income.
What is the expense distribution?
If you rent or purchase a home, this will incur monthly costs. This concerns costs such as:
- rental amount or interest charges within the mortgage supplemented with the repayment;
- interest charges and repayments on outstanding other debts resulting from consumer purchases;
- costs for the care and upbringing of the child;
- gas water and light;
- food and maintenance;
- who pays for a holiday;
- and such.
You can jointly have a large list of expenses per month, which must be paid by both partners. The burden is shared, so that people have relative scope within their income. It is therefore very clear that neither of the parties should ever have to bear all the costs, unless they have a very good income.
Registration that people live together
Partners who have a long-term relationship and live together must register certain things. More than a million people live together in this way, without the partnership actually being registered or a marriage taking place. It can mean a transition phase before actually taking the next step. In order to work on the future, people start living together and that means that there must be mutual respect for each other. Both for each other’s privacy, property and how rights and obligations are divided. The contract therefore constitutes a mutual obligation that must be complied with. It is a good idea to draw it up as soon as you start living together. Usually it only happens when one takes out a mortgage loan. The contract can prevent future problems.
Closing at the notary
In addition to the cohabitation contract, the mortgage deed is also arranged through the notary. Additionally, it is important to consider the possibility of death. Who is or should be the heir and which persons, for example, do they want to be excluded? In addition, you may want to leave something to a good cause. On the other hand, the question is whether an advance directive will be drawn up or not. This makes it possible to determine what should be done if one of the partners suffers intolerable suffering. Consider euthanasia. In addition to the cohabitation contract, these aspects can all be arranged at once so that you are done in one go.
Taxation
Because they have purchased a home together, a mutual tax relationship is created. This means that deductions, such as mortgage interest deduction, can be deducted from both incomes. Naturally, you will benefit most if most deductions are deducted from the highest income. You can get relatively more back. Be informed by a tax advisor so that your tax refund is optimally arranged.
Principles for breaking up
Every relationship has the potential to fail. The mutual contract therefore also determines how the mutual relationship can be terminated and how the shared items will subsequently be divided. Which items belong to which partner and for which items a distribution key must be applied. Who retains ownership of the home and how are the obligations entered into in the past resolved for the future? Often people will not think about it when concluding the contract, but it is even more necessary when they actually part ways.
The residence clause in the event of death
If the partners have children, an additional question arises. It may happen that one of the partners dies. In principle, the children are the heir and not the partner. The person is not married and there is no registered partnership. To prevent problems from arising, it is advisable to include a residence clause. This is a postponed inheritance in which the children are the heirs, but the surviving partner may use the property until death. Please note that this does not apply if the remaining partner is in danger of going bankrupt. Get information from the notary in your area.
read more
- When does a breach of contract occur and what are the consequences?
- The unlawfulness of contracts
- The importance of contractual liability
- Why shouldn’t you enter into a verbal contract?
- What should be included in a loan contract?