Moving in with a partner is an important milestone, but it can also have legal and financial consequences. In Ontario, married and unmarried couples have different rights when it comes to property, support, and the family home. A cohabitation agreement can help couples understand and establish their respective rights and responsibilities before a disagreement arises.
Whether you are planning to move in together or have already been living with your partner for years, understanding how a cohabitation agreement works can help you protect your interests.
What Is a Cohabitation Agreement?
A cohabitation agreement is a written domestic contract between two people who are living together, or intend to live together, in a conjugal relationship without being married.
Under section 53 of Ontario’s Family Law Act, couples can enter into a cohabitation agreement to establish their respective rights and obligations during the relationship, if they separate, or in the event of death.
A cohabitation agreement can address matters such as:
- Ownership and division of property.
- Financial responsibilities and debts.
- Spousal support obligations.
- Other financial arrangements between the partners.
It allows couples to make decisions about their financial arrangements rather than relying entirely on the legal rules that would otherwise apply if their relationship ends.
What Happens If You Get Married?
If the parties to a cohabitation agreement later marry each other, the agreement is generally deemed to be a marriage contract under section 53(2) of the Family Law Act.
This means the agreement can continue to govern the matters it addresses after marriage. However, certain legal protections, including statutory rights relating to the matrimonial home, cannot be contracted out of through a marriage contract.
Why Do Common-Law Couples Need a Cohabitation Agreement?
One common misconception in Ontario is that living together for a certain number of years automatically gives common-law partners the same property rights as married spouses.
This is not the case.
Under Ontario’s Family Law Act, married spouses generally have access to an equalization process when their marriage ends. This process calculates each spouse’s net family property and determines whether an equalization payment is owed.
Common-law partners do not automatically have the same statutory right to equalization, regardless of how long they have lived together.
Similarly, common-law partners do not automatically have the same statutory possession rights over the matrimonial home as married spouses.
Without a cohabitation agreement, property disputes may require a partner to establish a claim through other legal principles, such as unjust enrichment or a constructive trust. These claims depend on the specific circumstances and evidence.
A cohabitation agreement can provide greater certainty by setting out how property, debts, and financial responsibilities will be handled if the relationship ends.
What Can a Cohabitation Agreement Cover?
Every agreement is different. The terms should reflect the couple’s financial circumstances, priorities, and expectations.
Common provisions include the following.
1. Property and Assets
A cohabitation agreement can establish how property will be owned and divided if the relationship ends.
For example, it may address:
- Property owned by either partner before the relationship.
- A home purchased together or separately.
- Contributions toward a mortgage or renovations.
- Savings, investments, and business interests.
- Inheritances and gifts.
The agreement can clarify whether certain assets will remain the property of one partner or whether the parties intend to share them.
2. Debts and Financial Responsibilities
Couples may wish to establish how existing and future debts will be handled.
An agreement can address responsibility for debts brought into the relationship, shared expenses, and financial obligations arising during cohabitation.
It can also clarify how household expenses, mortgage payments, and other costs will be divided.
However, an agreement between partners does not automatically change a creditor’s rights under a loan, mortgage, or other contract.
3. Spousal Support
A cohabitation agreement can address whether one partner may be required to pay spousal support if the relationship ends.
The agreement may set out the circumstances in which support will be payable, the amount, and the expected duration. It may also include a waiver of spousal support.
However, support provisions may be challenged in certain circumstances. A court can review a domestic contract under the Family Law Act and applicable contract law, so a support waiver should not be assumed to be enforceable in every situation.
4. The Family Home
A cohabitation agreement can clarify each partner’s financial interest in a home and how its value or sale proceeds will be addressed if the relationship ends.
For example, the agreement may address:
- Who owns the property.
- How mortgage payments and other expenses will be shared.
- Whether contributions toward renovations affect ownership interests.
- How equity will be calculated and divided if the property is sold.
This can be particularly important where one partner owns the home before the relationship begins and the other contributes toward household expenses or improvements.
5. Household Expenses
Couples may also wish to establish how day-to-day expenses will be managed during the relationship.
For example, the agreement may address how the partners will share rent, utilities, groceries, insurance, and other household costs.
Clarifying these arrangements can help avoid misunderstandings about each person’s financial responsibilities.
Can a Cohabitation Agreement Determine Parenting Arrangements?
There are important limits on what a cohabitation agreement can address.
Under section 53 of the Family Law Act, a cohabitation agreement may address certain matters relating to a child’s education and moral training. However, it cannot determine decision-making responsibility or parenting time.
These matters must be determined in accordance with the applicable law and the child’s best interests at the relevant time.
A cohabitation agreement also cannot eliminate a child’s right to receive appropriate child support. Although an agreement may address financial arrangements relating to child support, the court retains authority to consider the child’s entitlement and whether the arrangements are appropriate.
What Makes a Cohabitation Agreement Legally Enforceable?
Ontario’s Family Law Act establishes formal requirements for domestic contracts, including cohabitation agreements.
Under section 55, a domestic contract is unenforceable unless it is:
- In writing: The agreement must be documented in written form.
- Signed by both parties: Each person must sign the agreement.
- Witnessed: The parties’ signatures must be witnessed.
Meeting these formal requirements is essential, but it does not guarantee that an agreement will never be challenged.
The Importance of Financial Disclosure
Full and accurate financial disclosure is strongly recommended before signing a cohabitation agreement.
Each partner should have a clear understanding of the other’s financial circumstances, including relevant income, assets, debts, and liabilities.
Under section 56(4) of the Family Law Act, a court may set aside a domestic contract or a provision of it if a party failed to disclose significant assets, debts, or other liabilities that existed when the agreement was made.
Providing financial disclosure helps both parties make informed decisions and reduces the risk of future disputes.
Independent Legal Advice
Each partner should obtain independent legal advice from their own lawyer before signing.
Independent legal advice helps ensure that both people understand the agreement, their legal rights, and the potential consequences of the terms.
Although separate legal advice is not one of the formal signing requirements under section 55, it is an important safeguard. It can also help demonstrate that each person understood the nature and consequences of the agreement if it is challenged later.
Voluntary Agreement
Both parties should have a reasonable opportunity to review and negotiate the terms without pressure or coercion.
A court may consider circumstances such as misrepresentation, undue pressure, or whether a party understood the nature and consequences of the agreement when deciding whether it should be set aside.
When Should You Sign a Cohabitation Agreement?
Ideally, couples should consider a cohabitation agreement before moving in together. Discussing financial arrangements early can make it easier to reach an agreement while both parties have an opportunity to consider their expectations.
However, you do not need to sign an agreement before beginning to live together. Couples can enter into a cohabitation agreement at any point during their relationship.
It may also be appropriate to review an existing agreement following significant changes, such as:
- Purchasing a home together.
- Starting or expanding a business.
- Receiving a substantial inheritance.
- Having or adopting a child.
- A significant change in either partner’s financial circumstances.
If circumstances change, the parties may wish to amend their agreement. Any amendment must also meet the applicable legal requirements for a domestic contract.
Frequently Asked Questions
Yes. A cohabitation agreement can be legally binding if it meets the formal requirements under the Family Law Act and is otherwise valid under applicable law. However, a court may set aside all or part of an agreement in certain circumstances.
Independent legal advice is strongly recommended for both partners. Each person should have their own lawyer review the agreement so they understand their rights and obligations before signing. However, independent legal advice is not a formal requirement for every agreement to be valid.
The law does not require couples to have lawyers prepare their agreement. However, using a template or drafting an agreement without legal advice can create risks. Important terms may be missing, and the parties may not fully understand the legal consequences of what they sign.
Under section 53(2) of Ontario’s Family Law Act, a cohabitation agreement is generally deemed to be a marriage contract if the parties marry each other. Certain statutory protections, including matrimonial home rights, cannot be waived through a marriage contract.
Yes. A cohabitation agreement can specify how property owned before the relationship will be treated during cohabitation and if the relationship ends. Clear terms and accurate financial disclosure can help reduce the risk of future disputes.
Key Takeaways
- A cohabitation agreement is a domestic contract available to couples who are living together or intend to live together without being married.
- It can address property, debts, financial responsibilities, and spousal support.
- Common-law partners do not automatically have the same property equalization rights as married spouses.
- A cohabitation agreement must be in writing, signed by both parties, and witnessed.
- Full financial disclosure and independent legal advice are strongly recommended.
- A cohabitation agreement cannot determine decision-making responsibility or parenting time.
- If the parties marry, their cohabitation agreement generally becomes a marriage contract.
