Cohabitation Agreements

Cohabitation Agreements in Ontario are domestic contracts similar to that of a marriage contract for legally married spouses. Common-law spouses who are not contemplating marriage but who wish to reside together or are already residing together may nonetheless wish to enter into an agreement that sets out the rights, responsibilities and obligations of each party in relation to spousal support and property division, in the event of a breakdown of the relationship.

Cohabitation Agreements in Ontario are often negotiated and put into place before cohabitation commences but can also be finalized after cohabitation has already taken place, although it is advisable to have a legally binding and enforceable cohabitation agreement in place within 36 months of the start of cohabitation or a common law relationship. This is relevant in relation to spousal support.  If your circumstances change at any time during your relationship, it may be a good idea to review any existing cohabitation agreement to consider if more reasonable, up-dated terms are warranted. Further, cohabitation agreements can be converted into a marriage contract, if the parties decide at a future date that they wish to marry.

As with marriage contracts, the goal of cohabitation agreements for common-law spouses is to establish rights, responsibilities and obligations that the spouses will abide by upon a separation. The terms of the agreement can be tailored to address the specific needs of the client, and can include clauses in relation to spousal support, division of specific family property, household contents and personal assets, life interest in a family residence if the breakdown of the relationship is due to a death of a spouse, to ensure that each spouse’s expectations of the other are clearly delineated from the outset.

Like marriage contracts, having a binding and enforceable cohabitation agreement is akin to having vehicle insurance. Just like car insurance may protect you in the event of an accident, a cohabitation agreement may protect or limit your financial risk or liability upon separation. This is because a cohabitation agreement generally sets out each party’s rights and obligations, such as how family and individual assets are to be divided, etc., in the event of a breakdown of your relationship. This is especially important if you are entering a second relationship with significant assets you wish to protect.

Unlike married spouses, there is no legislated process by which common-law spouses divide family property and assets. Instead, common-law spouses must rely on common law and equity claims to establish on a balance of probabilities a right to any division of property and assets accumulated during the length of the relationship, or to any property owned by the other spouse to which you may have contributed financially. This can be an extremely expensive and arduous process, and that is why it is generally recommended that all clients contemplating cohabitation with a partner negotiate and enter into a cohabitation agreement.

Moreover, a well-crafted cohabitation agreement is more likely to be held up by an Ontario Court if challenged by a spouse. Separation is difficult enough, so setting up the process in advance to manage the financial aspects can significantly reduce stress during an already emotional time.

That’s why it is so important that cohabitation agreements be negotiated with the assistance of, drafted by and then carefully reviewed by a family law lawyer who has expertise in this area. The team at Holam Law PC has the necessary experience and knowledge to help you achieve your goals in this regard.

Terms that can be included in a cohabitation agreement are as follows:

 · Limitations on and/or waivers of spousal support

 · Division and ownership of individual and family property and assets upon a breakdown of the relationship

 · How finances will be managed during the period of cohabitation or after separation

 · Life interest in real property due to the death of a partner

 · Any other matter which can be a point of contention at the end of the relationship

Limitations of a Cohabitation Agreement:

It is important to note that while cohabitation agreements can be put in place to protect financial considerations, these agreements cannot include any terms in relation to the decision-making responsibility and parenting time with any child of the relationship or child support in the event of a separation. These issues are resolved only after a breakdown of the relationship has already taken place.

It is imperative that all cohabitation agreements are prepared by a qualified family law lawyer to ensure that the terms will be legally binding and enforceable. Without a cohabitation agreement, property division for common-law spouses can be extremely complicated and is especially dependent on supporting documentation.

Our family lawyers have extensive experience working with clients to negotiate and craft cohabitation agreements best suited to their needs. We will work to determine your needs, compiling your disclosure documents to conform with legal requirements, negotiating the terms of the cohabitation agreement and then drafting the document once the terms are agreed upon.

Creating a legally binding cohabitation agreement requires that both parties (spouses) are honest and open about their financial circumstances. Detailed disclosure of all assets, as well as debts and liabilities, is required to be made under Ontario family law and legislation. The process by which full financial disclosure is made can be complicated, but our professionals at Holam Law PC are well-equipped with the knowledge and technical skill to assist you with this process.

In addition to the provision of full financial disclosure, another hallmark of a legally binding and enforceable cohabitation agreement is independent legal advice. This will ensure that you understand your individual rights and obligations under the agreement, so that you can enter it voluntarily and fully informed. It is important for you and your spouse to choose your own individual lawyer who will advocate for you alone. This will also help to create a more balanced cohabitation agreement.

A one-sided cohabitation agreement will likely result in a spouse challenging in court the terms of the agreement following a breakdown of the relationship. Escalation of the dispute in costly litigation is something that many may otherwise want to avoid. Cohabitation agreements lacking the hallmarks noted above are unlikely to be upheld in an Ontario court.

If you are legally married or are planning to be, a Marriage Contract may be more appropriate for your circumstances.

.Marriage contracts in Ontario are often negotiated before marriage, but they can be updated after the marriage has taken place. If circumstances change at any time during your marriage, it may be a good idea to review any existing marriage contract to consider whether the terms should be updated.

Marriage contracts are domestic contracts that can be customized to suit the parties’ needs to ensure that the rights, responsibilities and obligations of each party are protected to the greatest extent possible.