What Is a Common Law Agreement?

Some local jurisdictions recognize the validity of a common law agreement. This is a legally binding contract that is entered into by two cohabiting partners who wish to be recognized as married without an actual ceremony. As long as they are legally competent, of legal age of majority, and have no legal impediments barring a union, the two partners simply agree to be married. A written contract may be drawn up to detail each individual's rights to shared money, property and custody of any children.

A common law agreement is not automatically created through cohabitation. While it is as valid as a marriage that results from a traditional ceremony, the agreement typically occurs without a local marriage license. Each partner should have the intention to marry the other and they should live together for a significant time period. The couple should also formally recognize themselves as married, by using the same surname and filing their taxes jointly. If the couple ever wishes to dissolve the union, legal divorce proceedings are necessary.

Oral or written agreements may be made between partners when entering into a common law relationship. Somewhat similar to a prenuptial agreement, a written common law agreement dictates the ownership of property and what happens if one of the partners dies. If there are children currently involved or if the couple anticipates having children, custody rights and agreements will be detailed as well.

Some couples find it beneficial to enter into a common law agreement that separates the details of their relationship from the potential division of property and finances. One section of the agreement might divide up household responsibilities, such as who does certain weekly chores. The relationship section may also detail what social behaviors are permitted, including whether guests are allowed and when.

In terms of property and personal finance divisions, several issues are typical in a common law agreement. Those issues include separate property owned prior to the relationship, property obtained during the relationship, how to divide up the household expenses and the dissolution of the relationship through death or separation. Some couples agree to keep the ownership of certain property separate while others decide to maintain joint ownership. Expenses might be split in half equally, divided up in proportion to income or shared by pooling both individuals' income sources.

A few agreements will also include a provision for mediation or arbitration in the event of a dispute. Disagreements tend to arise in the event of an impending dissolution of the relationship and are often over matters that weren't detailed in writing. Adding in a dispute resolution clause might help save the hassle and cost associated with a formal lawsuit.