A “cohabitation agreement” is a contract between unmarried partners who live together, and it can be signed before the couple move in together or after. It usually specifies things like the rights and obligations of each party during the cohabitation, and what will happen if the relationship ends. For example, who will own property acquired during the relationship? Will one partner be obliged to support the other, and for how long? Who will move out of the shared residence, and how soon after the relationship ends should that person be expected to find a new home?

In Ontario, one of the key legal differences between married and cohabitating partners is that married couples are treated as an economic unit, while cohabitating couples are not. For example, when a married couples divorces after three years or more, both have an equal claim to live in the family home, regardless of whose name the property is in. Cohabitating partners do not automatically have this right. Married couples who divorce ordinarily share the value of the property acquired during the marriage, as well as any increase in the value of the property they brought into the marriage. This is not usually the case for cohabitating couples. If a married person dies without a will, the surviving spouse is ordinarily entitled to part of the estate. If the couple is not married, the surviving partner does not have an automatic claim on his or her partner’s estate.

But do you really need a cohabitation agreement? A lawyer who specializes in family law can advise you about your particular situation. Likely, the answer depends on how much property you own and how complicated your life is. If either or both partners own a home or other substantial assets, or has children, a cohabitation agreement might be a good idea. Another factor to consider is whether the shared living arrangement is meant to be temporary or long-term. If the arrangement is meant to be long-term and indeed to take the place of a marriage, then having a formal agreement is probably advisable. Ordinarily a cohabitation agreement remains valid if the couple marries.

There are additional reasons for couples to work out a cohabitation agreement before moving in together. Working together on a cohabitation agreement can give each person some idea of how the other deals with conflict, and if they are able to have together what mediators like to call “difficult conversations.” Having an open and honest discussion about each other’s financial situation and financial goals early in the relationship can help avoid conflict and misunderstanding later on. Another good reason to have a cohabitation agreement is that, if the relationship does break down, a legally binding agreement can provide some predictability about property rights, and it can help protect against unnecessary cost and litigation.

For a cohabitation agreement to be legally binding the parties must sign it in front of a witness (who also signs); each must make a full and frank financial disclosure; and the parties must sign voluntarily. Each person signing the agreement needs independent legal advice. That means each partner should go over the agreement with his or her own lawyer. It is better to spend the money at the outset to make sure that you have a durable agreement than to find out later (and at much greater expense) that the agreement won’t hold up in court.

Are you (or someone you know) thinking about a cohabitation or premarital agreement? Do you need to have a conversation with your partner about this, but don’t know where to start? Get in touch with me via the contact form. I can help you get started and make sure that the negotiations strengthen your relationship rather than damage it.