Cohabitation – A Guide for Forward-Thinking Common Law Couples

Living with another person constitutes as cohabiting. If involved in a relationship with said person, and you have been living together for 3 years (or 1 year with a child), you are now in a common-law relationship. According to Ontario law, being in a common law relationship, regardless of how long you have been living together, does not guarantee an equal split of assets upon separation. In this case, the division of assets can be messy, especially when there is property purchased in both names and various assets that both parties were involved in purchasing.

What is a Cohabitation Agreement?

A cohabitation agreement is an official document that allows individuals to establish specific financial and family agreements for their relationship. Important terms can be stated, such as who will keep specific assets and how assets jointly purchased during the cohabitation are treated if they choose to separate. The purpose is to make rights and responsibilities, in the event of a future breakdown, clear to both cohabiting spouses. A cohabitation agreement offers the same protection that prenuptial agreements or marriage contracts would in the case of marriage. In many cases, families will strongly suggest the agreement in situations involving heritage money to be passed down through bloodlines. They are also extremely useful in cases of purchasing a common-law house, anticipating a long-term relationship void of marriage, and complicated financial histories.

The agreement itself can protect spouses by spelling out what property can be split, how it will be split, how spousal support will be handled and how joint debts will be paid.  In a marriage, the law states that everything, including property, RRSPs, and any other assets, is split evenly between the two parties upon separation. Without a cohabitation agreement, common-law partners have to rely on the common law to permit them to make a claim against their partner’s assets. In most cases, these claims will never get to an equal split and can result in little or no earning, with hundreds lost in legal fees. This becomes especially complicated in cases of estates and mortgages.

In order to draft a separation agreement, each partner will require their own family lawyer. Multiple lawyers prevent conflicts on the lawyers’ side and ensure a fair agreement on both of the involved parties. Both individuals must provide full financial disclosure, explaining all debts and assets, to their lawyers for consideration in the agreements. It is important to be upfront with all and any assets, as a fair separation agreement is more likely to be viable in court, and your lawyer can only make it fair using the materials provided.

Many couples believe they can avoid getting a lawyer and simply draft the agreement themselves, which is an option, but in the case of court, it will likely not hold up as an official document. Should you still want to draft your own, ensure you at least get it commissioned, as it will provide it more weight in court.

Just like with any legal document, before signing anything, it is important to review the document and ensure that everything that is written is what you agree to. Never sign anything you are unsure about, as you can find yourself in a tougher situation later. Only sign a document you are fully confident and comfortable with, that your lawyer has also reviewed and approved. Once an agreement has been signed, you must abide by it, and in order to make any changes, you must negotiate a change to the agreement. Any changes must be in writing and signed in front of a witness. If an agreement cannot be reached in regards to the revisions, a court will be necessary in order to decide a fair solution, which is where your individual lawyers can assist again.

Much like a relationship, a cohabitation agreement is based on trust and mutual understanding. Having a lawyer assist you through the process also empowers you to confidentially ask any questions you might have. Find a lawyer you can trust will be there to support you and ensure your best interests are taken care of, to ensure peace of mind for your long-term common-law relationship.

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