Your Guide to Cohabitation Agreements
Some Canadian couples choose to live together in a common-law partnership instead of getting married. The legal differences between these two situations can vary depending on the province or territory you live in and the number of years you’ve been together. For example, in Ontario, If you are involved in a relationship with said person, and you have been living together for 3 years (or the day your child is born), you are considered to be in a common-law relationship.
If you and your partner eventually choose to separate, the division of assets can be challenging. This is especially true if there is property purchased in both names or various assets that both parties were involved in purchasing. A cohabitation agreement can be a useful way to formalise arrangements between unmarried spouses on matters not covered by the law.
What is a Cohabitation Agreement?
A cohabitation agreement is a legal document that you prepare as a couple to establish specific financial and family agreements for your relationship. Some provinces require it to be drawn up by a lawyer or with a lawyer’s assistance. Even if the agreement isn’t mandatory, seeking legal advice is highly recommended.
The purpose of this agreement is to make rights and responsibilities clear to both partners, in the event of a breakup in the future. A cohabitation agreement offers the same protection that prenuptial agreements or marriage contracts do in the case of marriage.
Cohabitation agreements are also extremely useful for situations like the purchasing of a common-law house, anticipating a long-term relationship without marriage, and if the partners have complicated financial histories.
Cohabitation agreements allow both partners to agree on:
- The property and debts each person has when you start living together
- How shared property will be divided in the event of a separation
- The terms of repayment for shared debts in the event of a separation
- The payment of alimony in the event of a separation
- The terms of review of the agreement in the event of a major life change for one of the partners after separation
Cohabitation agreements work the same way for all couples, regardless of gender. They can include anything you consider necessary to your relationship and can make it easier to manage the unexpected.
Note: The laws for common-law partnerships fall under provincial and territorial jurisdiction in Canada, so there are legal differences depending on where you live. In some provinces, like British Columbia and Alberta, the rights of couples in common-law partnerships are very similar to those of married couples. No matter where you live, it’s best to consult a lawyer for your specific situation.
Key Legal Advantages of a Cohabitation Agreement
- Properly notarized agreements can help prevent inequality in the event of separation, and
- Detail what will happen to the couple’s finances and shared assets if they separate. This is especially important if one spouse is financially dependent on the other.
For example, a woman decides to leave her common-law partner. When they started seeing each other, both partners agreed that she would stay home to take care of their children. Following their separation, she finds herself in a difficult financial situation and her common-law spouse refuses to help her. A cohabitation agreement can provide for the payment of spousal support.
Cohabitation agreements are not set in stone:
- They can be cancelled or updated as your relationship changes, as long as both partners agree. Reviewing this document annually is a good way to keep everything current.
For example, one partner had a modest income when they moved in with their common-law partner. Their cohabitation agreement outlined that they were to be paid alimony if they separated. In the last year, the situation reversed– the higher-earning partner lost their job, and the other received a promotion. Following this change, the couple modified their agreement to reflect this new reality.
Changes made to an existing cohabitation agreement drawn up by a legal professional need to be made by a notary or lawyer. Another option is to draft a new cohabitation agreement and sign it before witnesses, this automatically cancels the previous version. Both spouses must agree to the changes and sign the new agreement or the amendments to the latest version for the document to be valid.
How Do I Get a Cohabitation Agreement?
Some provinces and territories allow you to draft and customise your own agreement using an online template, but others do require the involvement of a lawyer.
Even if it costs a little more upfront, it’s usually best to seek professional assistance from an expert notary or lawyer. This can help you avoid even greater costs after a separation, especially if there is a disagreement.
For a cohabitation agreement to be valid, both spouses must agree to it, and you must:
- Be of age and have the legal capacity to consent
- Consent freely with full knowledge of the facts
- The document must also be dated and signed by at witness
Adding your common-law partner to your immigration application?
Find out how with our Quick Guide to the Statutory Declaration of Common-Law Union.
What’s in a Cohabitation Agreement?
Each agreement is unique and will vary depending on your wishes and priorities.
The most common elements of a Cohabitation Agreement include:
- Basic information: Full name, address, and occupation of each partner
- Cohabitation: The rights and obligations of the partners, the sharing of tasks and property, the sharing of current expenses, and the impact of children on the living situation
- Separation: The division of the house, other property and assets purchased during the common-law relationship, the repayment of debt, and spousal support
- Other special clauses: Any clause the couple decides on together, as long as it doesn’t violate any other laws.
Remember to have this document notarized to ensure that its contents are valid, authentic and legally binding.