Cohabitation Agreement – OntarioLawQX
What is a cohabitation agreement?
A cohabitation agreement is a contract made between unmarried or common-law couples who live together. A cohabitation agreement is a type of domestic contract that helps protect individual interests, set out the responsibilities of each person during the relationship and specifies the rights of each person if the relationship comes to an end.
A cohabitation agreement is similar to a prenuptial agreement signed by a couple before getting married. Like a cohabitation agreement, a prenuptial agreement sets out specific responsibilities, particularly financial ones, both during the relationship and if the marriage should come to an end.
Having a cohabitation agreement can help cohabitating couples avoid additional stress and disagreements if they end their relationship, as commitments regarding the division of assets have already been made and are legally binding in most cases.
When should you consider making a cohabitation agreement?
For long term unmarried couples living together, it is worthwhile to consider making a cohabitation agreement. For long-term couples that do not plan to get married, a cohabitation agreement can be a way to ensure similar rights to those possessed by married couples. This is because the cohabitation agreement can include the division of property/assets, and support payments should the relationship come to an end. It is worth noting that while Canadian law ensures the equal division of property between married couples upon divorced, the same does not apply to common law or cohabitating partners.
Specifically, couples should consider creating a cohabitation agreement if one or both partners have large assets, or if there are any shared large assets. This would include if one partner owns a home that the other has moved into, or if partners purchase a home together.
What should you include in your cohabitation agreement?
A cohabitation agreement can include responsibilities both during the relationship, and in the event it comes to an end. These responsibilities can include:
- Debt management
- Division of property/assets
- Spousal support payments
- Inheritance and wills concerns
- Will the cohabitation agreement continue to apply in the event the parties get married?
A cohabitation agreement cannot specify who gets custody to any children in the event a couple breaks up. Decisions about custody of children must be made at the time a couple separates, and that decision is based on what is in the best interests of the child at the time of separation.
Cohabitation Agreement Onotario Sample/Template
A sample cohabitation agreement can be found here on Law Depot where you can make your own cohabitation agreement.
It is advisable that each individual seek independent legal counsel before drafting and entering into a cohabitation agreement in order to ensure that the cohabitation agreement will be enforceable. Seek out a lawyer who is specifically a ‘family law lawyer’. You want to hire someone who focuses on family law, not only dabbles in it.
A family law lawyer will not be prohibitively expensive. Generally, in Ontario, a family lawyer will charge about $300-$600 per hour, and it should only take a few hours to review/draft a cohabitation agreement. Spending about $1,000 now may save untold amounts should a later disagreement arise.
Is your cohabitation agreement enforceable?
For a cohabitation agreement to be enforceable in court or arbitration etc. in Ontario, it must be in writing. Anything that is agreed to in the course of conversations regarding what should be in the cohabitation agreement must be included in writing.
If the cohabitation agreement includes language suggesting that the couple may marry at some point, and they do in fact marry, the cohabitation agreement may be enforceable. However, if the agreement does not include language suggesting the couple contemplated marriage, and do marry, it may not be enforceable. This is why it is important to have your cohabitation agreement reviewed by a family law lawyer.
A cohabitation agreement may be found unenforceable if full financial disclosure was not made at the time it was entered into. If one partner was not aware of assets or debts held by the other partner, it is likely the cohabitation agreement will be unenforceable in Ontario.
In determining the enforceability of a cohabitation agreement, a court, arbitrator or mediator will likely take into account whether the agreement was signed under conditions of duress. This would mean if one party was presented with the agreement by the other the day before moving in and told they would only live together if the agreement was signed, or other situations where the parties were not in similar states of mind at the time of signing the agreement.
If the cohabitation agreement is heavily weighted in favour one party, assigning them more assets or less financial responsibility in the event the relationship comes to an end, it is possible that the agreement will be unenforceable for reasons of unfairness and unconscionability. This issue can often be avoided if each party receives independent legal advice at the time of forming the agreement.
Any provisions in your cohabitation agreement relating to spousal or parental support may not be enforceable depending on the situation each partner is at the time of separation. While spousal or parental support provisions can be included in your cohabitation agreement, they may not necessarily be enforceable in the event of separation. Any provisions regarding custody of pets will likely be enforceable.
It does not matter if the spousal or parental support provision was reasonable at the time the cohabitation agreement was made. If the support provision results in very unfair terms, such as if one partner became very rich over the course of the relationship, a court could grant relief to the party who would be treated unfairly.
Nevertheless, the case Clayton v. Clayton, 1998 CanLII 14840 (ON SC) stands for the proposition that the courts are reluctant to set aside a cohabitation agreement in Ontario and will do so only in situations where one party is unable to protect himself or herself. That court stated:
… It does not matter if the support provision was reasonable at the time the agreement was made. If the support provision results in unconscionable circumstances, that is, at the time of the application to set aside the agreement, the circumstances are unconscionable, the court can grant relief.Clayton v. Clayton