Cohabitation Agreement in Ontario

What is a Cohabitation Agreement?

A cohabitation agreement is a type of domestic contract between two people who are living together or planning to live together in a common-law relationship. It sets out each person’s rights and obligations during the relationship and in the event of a separation. In essence, it’s similar to a prenuptial agreement, but for couples who are not married (though it can also apply to couples who intend to marry; if they marry, the cohabitation agreement automatically becomes a marriage contracts). Cohabitation agreements allow partners to customize how their property, finances, and support issues would be dealt with if they break up, rather than relying on default laws which, as we saw, might not adequately protect common-law partners.

Why Have a Cohabitation Agreement?

Unlike married spouses, common-law partners don’t have built-in property rights. A cohabitation agreement can fill that gap by clearly outlining things like: who will own what, how assets acquired during cohabitation will be handled, will any support be paid if you split, etc.. It provides certainty and reduces conflict in case of a separation. It’s especially important if:

• One partner has significantly more assets or income than the other at the start (they may want to protect those assets or avoid a potential support claim).
• One partner is giving up a career or selling a home to move in with the other (they may want assurance they’ll be compensated or have rights to property).
• Both partners want to avoid costly litigation and have a clear plan.
• The partners intend to marry eventually – the cohab agreement will become a marriage contract, so it’s like doing a prenup in advance, covering both scenarios.

Key Contents of a Cohabitation Agreement:

• Property Ownership and Division: This is often the main focus. The agreement can specify which assets are separate property (belonging to one partner solely) and which, if any, will be considered joint property. For example, you might agree that each party’s premarital or pre-cohab assets remain theirs, and any asset acquired in both names will be shared, or perhaps even assets acquired during cohabitation but paid jointly will be split 50/50. Many agreements state that no matter the contributions, certain property like the house will remain the property of the title holder unless otherwise agreed. Or conversely, it might grant a buyout or share to the non-owner based on contribution (to avoid unjust enrichment fights later). Essentially, you can opt out of the trust law uncertainty by setting your own rules.
• The Matrimonial Home (if you later marry): Some cohab agreements (to be marriage contracts) might address what happens with a matrimonial home if married – e.g., saying each party waives rights to the other’s premarital home value (since normally a marriage would entitle sharing of the home’s growth). Though note, you cannot waive the right to possess the matrimonial home by contract, but you can waive sharing its value.
• Debts: Who is responsible for which debts. Often, “yours is yours, mine is mine, and any joint debt we explicitly co-sign, we share” is the approach.
• Spousal Support: The agreement can include a clause on spousal support obligations (also called partner support in context of common law). You could agree that neither will claim support from the other, effectively waiving it. Or you might outline a specific support arrangement (like if one leaves the workforce to raise children, maybe the other will pay X amount for Y years if they split). It’s wise to consider future scenarios. Waiving support completely is something courts will uphold if it’s fair and both had independent legal advice, but could be set aside if it results in extreme unfairness or dependence on social assistance. Still, many choose to waive or limit spousal support in cohab agreements.
• Joint Expenses and Finances: Some agreements cover how day-to-day finances will be handled. For example, will you have a joint account for household expenses, and contribute in a set proportion? While not strictly necessary in a legal contract, it can help avoid misunderstandings.
• Exit Plan for the Home: If the couple lives in one partner’s house, the agreement might specify how long the other partner can stay after breakup (e.g., must move out within 60 days) and whether any moving cost assistance or housing support will be given. This can prevent fights since common-law have no possessory right by default.
• Estate Rights: Although wills are the main tool for estate planning, some cohab agreements state that each partner will make a will to leave certain things to the other, or explicitly waive any estate claims (common-law partners don’t have automatic estate rights, but if planning to marry or just wanting to formalize intentions, they might commit in the agreement to each other financially in event of death). At minimum, might promise to maintain some life insurance for the other.
• Children and Support: If you already have children together (or from prior relationships) you might address child support or custody in a cohab agreement. However, clauses about children are not binding in the same way – a court will always decide based on the child’s best interests at the time. You can’t contract out of child support obligations, for instance. So, you can express intentions (like agree on joint custody or a certain parenting schedule or an amount above guideline support) but you cannot prejudge a future child’s best interest if not born yet. If you do have children, better to do a separate parenting agreement or include a section that is modifiable as needed.
• Dispute Resolution: Some agreements include how you’ll resolve disputes if you do separate – e.g., agreeing to try mediation before court, or where any court disputes must be filed (jurisdiction). If concerned about privacy, maybe agree to use arbitration for support/property issues rather than court.

Conversion to Marriage Contract: If the expectation is to marry, a clause can note that upon marriage, the agreement will be deemed a marriage contract under the FLA, so it’s clear it continues in forces.