TORONTO LAWYERS FOR

Cohabitation Agreements

 

Ontario law enables unmarried, or common-law spouses who plan to live together or in fact live together to enter into an agreement known as a cohabitation agreement. A cohabitation agreement provides for the rights and obligations each spouse will have as a result of their relationship.

The main purpose of a cohabitation agreement is to protect a couple financially if the couple chooses to live together without being married. The agreement, among other matters, usually sets out the spouses’ ownership in and/or division of property, and their support obligations. Cohabitation agreements cannot determine the rights of custody or access to children.

The property rights of married couples and unmarried couples in Ontario are substantively different. Ontario’s legislated property division regime is limited to married spouses only. The Family Law Act recognizes that marriage is a form of economic partnership in which spouses share the value of property acquired during the marriage. This is done through an equalization payment, not a sharing of the assets themselves. Married spouses also have an equal right to continue to live in the matrimonial home. This is true no matter which spouse’s name is on the deed or the lease.

These rules do not apply to unmarried couples. The act of cohabiting, unlike getting married, does not entitle one person to a share of the other’s property. There is no statutory protection for a cohabiting spouse’s interest in property to which the other spouse holds title. A cohabiting spouse who has not executed a cohabitation agreement must rely on equitable remedies to assert a claim against a property. The claimant must show that the party on title has been unjustly enriched at the claimant’s expense. The court determines the appropriate remedy, which may be a monetary award or a constructive trust over the property.


YOU AND YOUR SPOUSE'S RELATIONSHIP IS UNIQUE. YOUR COHABITATION AGREEMENT SHOULD/CAN BE TOO.

 

Cohabitation agreements can be made to reflect a couple’s unique financial relationship. For common-law spouses who choose to be financially independent, the agreement can provide that each party is responsible for his or her own financial support and has the rights to his or her own property.

Common-law spouses who choose to have a more financially interdependent relationship would approach their cohabitation agreement with different objectives. Perhaps their agreement would specify that property is to be shared jointly even though title is held in one spouse’s name but the other spouse has made a greater contribution to care of the couple’s children.

Regardless of the specifics of a cohabitation agreement, each agreement may consider pertinent financial details relating to children, career, retirement, purchases and savings, support, rights to inherit property in case of the death of one of the spouses and an acknowledgment of dependent children.

If the couple marries in the future, their cohabitation agreement may become a marriage contract, governing their changed status and the rights and obligations it entails, unless a contrary intention is indicated in their agreement.

In preparing a cohabitation agreement, it is important to know that a testator’s will is revoked upon his or her marriage, subject to certain exceptions. There is not the same consequence if a person enters a common-law relationship.

Although it can be signed at any time during the relationship, we recommend that an unmarried couple sign a cohabitation agreement before they move in together. Otherwise, it may be more difficult to have financial discussions as the relationship progresses.


SET CLEAR FINANCIAL EXPECTATIONS FOR YOUR COMMON-LAW RELATIONSHIP.

 

Discussing and agreeing on financial matters gives each common-law spouse a better understanding of his or her expectations related to the relationship. Making these types of decisions can help reduce frustrating disputes that may arise in the event of a separation. A cohabitation agreement clarifies the division of property and what happens if spouses contribute to each other’s property. For example, if one spouse gives something of financial value to the other spouse, will it be considered a gift or do the spouses share in the property?


Frequently Asked Questions (FAQs):

You don’t need the court except to process a divorce after all other issues arising out of the marriage and separation are settled by agreement. The usual practice is to see the progress to divorce as a two-stage matter with the divorce in the second stage. The first stage is the negotiation of a separation agreement that takes care of all the other issues.
Yes. Your status as a separated spouse does not depend on whether or not you signed a separation agreement. You and your spouse are separated when you are living apart from each other, and one or both of you have made a permanent decision not to resume your life together. There is nothing in our law that requires you and your spouse to live together; therefore, there is nothing in the law that requires you to obtain permission from any authority or person to separate.
If you settle all matters arising out of the marriage and separation without going to court, the settlement should be recorded in a separation agreement even though a divorce is contemplated. The agreement must be in the form of a separation agreement to comply with the definition of a “domestic contract,” which has special properties in family law, and to meet the requirements for certain tax advantages that are available. Notwithstanding that it is a separation agreement, when properly drawn it is made to govern the rights and obligations of the parties with respect to each other on separation, divorce and death.
After the separation agreement is signed, the application for divorce is usually made by one or other of the parties although there is provision for the application to be made jointly by both of them. (A joint application is more complicated and of little practical benefit.) The most frequently used ground is marriage breakdown by reason of a separation of at least one year. In this case, the application can be made by either spouse. Sometimes, much less frequently, marriage breakdown by reason of adultery is the ground relied upon. Here, the application is made by the other spouse. (A third possibility, almost never used, is marriage breakdown by reason of cruelty.) The application is a simple form, and where there is a separation agreement the order requested is for a divorce only. The application is filed in the court, and a copy is delivered to the other spouse. Since all issues associated with divorce have been settled in the separation agreement and since there is no dispute about the ground for divorce, the other spouse has no reason to file an answer and lets the time for doing so go by. At this point, the spouse who made the application files the required affidavit and other documents in the court registry asking for an order for divorce. An official at the court checks the documents and if they are complete takes them to a judge who, in due course, dates and signs the divorce order without the need for the parties or their lawyers being present. The court official mails the divorce order to the parties. The divorce takes effect thirty-one days after the date of the divorce order. When this time has expired, an application can be made for a certificate of divorce that is needed for purposes of remarriage.

We can help you find a resolution that will help your family move on.


If you are going through family issues or a relationship breakdown in the Greater Toronto Area, contact the laywers at MacDonald & Partners LLP and come into our office, in downtown Toronto, Etobicoke, Oakville and North York.

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