Cohabitation Agreements

Cohabitation Agreements

Couples in a common law relationship often hold the misconception that after living together for a certain period, they attain a status equivalent to being married. While this perspective holds some validity, particularly in terms of cohabitation and forming a family, it is largely inaccurate.

The legal system draws a clear distinction between a common law partnership and a formal marriage, with noticeable variations when it comes to aspects like separation, distribution of joint assets, and ownership of property acquired during the relationship.

In essence, common law partners lack the same level of legal protection that married couples enjoy. The privileges that married couples are entitled to as a matter of right are either not applicable to common law partners or require a convoluted process to obtain.

Consequently, it’s natural for couples in common law relationships to seek ways of safeguarding their rights during and after their partnership. One approach to achieve this is by entering into a cohabitation agreement. But what exactly is a cohabitation agreement, and what purpose does it serve? Let’s delve into the details.

Understanding Cohabitation Agreements

According to Ontario law, individuals who are unmarried or in common law relationships, whether they intend to live together or are already doing so, have the option to establish a legally binding contract referred to as a cohabitation agreement. This agreement outlines the rights and responsibilities of each partner arising from their relationship.

The primary objective of a cohabitation agreement is to provide financial protection for a couple who choose to cohabit without formal marriage. The agreement typically addresses aspects such as ownership or division of property and financial support obligations, among other considerations. However, it’s important to note that cohabitation agreements cannot determine child custody or visitation rights.

A notable distinction exists between the property rights of married and unmarried couples in Ontario. The provincial Family Law Act exclusively governs the division of property for married spouses. This act acknowledges marriage as an economic partnership where spouses share the value of assets acquired during the marriage. This division occurs through an equalization payment rather than a direct division of assets. Additionally, married spouses have an equal entitlement to continue residing in the matrimonial home, irrespective of which partner’s name is on the deed or lease.

These legal principles, however, do not extend to unmarried couples. Unlike marriage, cohabitation does not grant one partner an automatic claim to the other’s property. There is no statutory protection for the interest of a cohabiting partner in property titled under the other partner’s name. If a cohabiting partner hasn’t entered into a cohabitation agreement, they must rely on equitable legal remedies to assert their claim over a property. This involves demonstrating that the title-holding party has gained unjust enrichment at the expense of the claimant. The court subsequently determines the appropriate recourse, which could be a monetary settlement or a constructive trust established on the property.