Cohabitation agreements, also known as "living together agreements," are executed before or shortly after a couple starts living together. A couple may enter into a cohabitation agreement with the intention of addressing things that might happen during the time they live together, or "cohabit," but cohabitation agreements are most often intended to address the issues that might arise if their relationship breaks down. Cohabitation agreements are fairly rare. It is important to know that there is no legal requirement that you must enter into such an agreement if you're living with someone or are going to be living with someone.

Unmarried Couples and Cohabitation Agreements

It is important to understand exactly how the legal status of unmarried couples differs from that of married couples before even thinking about whether a cohabitation agreement is appropriate. This segment will provide a brief discussion of this topic; the section "Unmarried Couples" should be read for a better understanding of these issues.

Married couples have been legally married, either by a civil ceremony performed by a marriage commissioner or in a religious ceremony performed by a religious official. An unmarried couple can become a "common-law couple" when they have lived together in a "marriage-like relationship" for two years. Unmarried couples, including common-law couples, are not legally married to one another.

For the purposes of this chapter, the distinction between married spouses, common-law partners and couples who have lived together for less than two years lies in the different legal issues that arise when these different sorts of relationship come to an end. Here's a summary:

	Married Couples	Common-Law Couples	Other Couples
Care of Children	Yes	Yes	Yes
Child Support	Yes	Yes	Yes
Spousal Support	Yes	Yes
Family Assets	Yes
Trust Claims to Assets	Yes	Yes	Yes

Issues relating to the care and control and support of children born in the relationship are fairly straightforward: married and unmarried couples all may have a claim. With respect to spousal support, only married and common-law couples may make a claim.

Issues relating to property are a bit more complex. Only married couples can claim for the division of assets under the Family Relations Act. Since unmarried couples cannot apply for the division of assets under the Family Relations Act, they can only make a claim against assets owned by the other under the law of constructive trusts, express trusts or resulting trusts. This a lot more complex than making a claim under the legislation, and, even if the claim is successful, the amount awarded is generally a lot less than half. Trust claims are discussed in detail in the chapter "Unmarried Couples > Common-Law Relationships."

This leads to a final point. Under s. 120.1 of the Family Relations Act, common-law couples can "opt in" to the parts of the act that deal with the division of family assets but only if they have cohabitation agreement that deals with the division of assets and a claim is made challenging that division. This issues is discussed in more detail in the last segment of this chapter.

Deciding Whether a Cohabitation Agreement is Appropriate

The usual reason why a couples enter into cohabitation agreements is to protect their respective financial positions, so that each party's circumstances going into the relationship is preserved as much as possible if the relationship comes to an end. Sometimes a party wants to preserve assets from possible claims by the other. Sometimes a party wants to be protected from debts owed by the other. Generally speaking, most couples who are thinking about executing a cohabitation agreement want a "I'll keep what's mine, you'll keep what's yours" sort of deal.

Cohabitation agreements are usually entered into when:

1. the relationship is expected to be a long one;
2. one or both of the parties have a substantial amount of property or assets going into the relationship;
3. one of the parties has significantly more income or significantly more assets than the other;
4. the couple anticipate living in a home owned by one of the parties;
5. one or both of the parties expect to acquire substantial assets during the relationship from, for example, an inheritance, a settlement, a court award, or a gift;
6. one or both of the parties has significant debts going into the relationship;
7. the parties intend on having children;
8. one or both of the parties is bringing a child into the relationship; or,
9. the parties expect that the relationship will be "traditional," with one party working out of the home and supporting the other.

Cohabitation agreements are generally not appropriate when:

1. the couple are young;
2. the point of the agreement is to avoid sharing assets (see the last segment of this chapter, "Property and Cohabitation Agreements);
3. neither party has significant assets or income going into the relationship;
4. neither party is bringing any children into the relationship;
5. both parties are working out of the home and expect to continue working out of the home; or,
6. the couple intend to marry.

The essential concern with most asset-and-debt type cohabitation agreements is what will happen if the relationship ends. Cohabitation agreements can also be useful, however, to set rules for how the parties will manage things during the relationship. When a cohabitation agreement is needed to deal with those issues, the parties' respective financial positions may not be relevant. This sort of agreement is even more rare than agreements intended to protect assets.

The usual sort of issues a household-management kind of cohabitation agreement is intended to address include:

• Who will pay for the household expenses? Will each party pay for a specific set of bills, or will the parties share in all the bills in a fixed amount?
• Will the parties keep separate bank accounts, or will they have a joint account for household costs? If there is a joint account, how will each party contribute to the account?
• Who will do the household chores? Will each party be responsible for a list of particular tasks?
• How will children brought into the relationship be cared for? Will the other partner assume any parenting responsibilities?

If, at the end of the day, a cohabitation agreement is appropriate and desired, the parties will negotiate the terms of the agreement, and one or both of the parties will prepare a written agreement for each to sign. As with all family agreements, it is important that both parties get independent legal advice about what exactly the agreement means, how it affects their present rights and responsibilities towards one another, and how it will affect those rights and responsibilities if their relationship comes to an end. Getting independent legal advice "strengthens" the agreement by preventing one spouse from saying "I didn't know what it meant" and challenging the agreement.

Finally, note that a good cohabitation agreement should specify that the agreement will end once the parties marry, or that the agreement will be considered to become a marriage agreement if the parties marry. Either way, the prospect of marriage and its impact on the cohabitation agreement should be dealt with in some manner in the agreement unless the couple are absolutely clear that marriage is not an option.

Do-It-Yourself Cohabitation Agreement Kits

Staples, Chapters, London Drugs and other stores generally carry a wide range of DIY legal products, from doing your own Will to getting your own divorce.

In the author's view most of these DIY kits are fine for most people most of the time. They are not fine for cohabitation agreements. Cohabitation agreements are terribly complicated and must be drafted with a good knowledge of family law in general and cohabitation agreements in particular. Do not buy a DIY marriage agreement kit.

If you absolutely must have a cohabitation agreement, it's well worth $1,000 to $3,000 to pay a lawyer to draw it up correctly for you, rather than spend $10,000 to $30,000 on lawyer's fees down the road if the agreement is flawed.

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The point of entering into a cohabitation agreement is so that, at some later time, the parties will be required to abide by its terms and, if not, then the contract will be enforceable in court. As such, a cohabitation agreement, just like any other family agreement, must conform to certain basic rules, including the following:

• A cohabitation agreement must be set out in writing.
• The agreement must be signed by each party in the presence of a witness.
• The parties cannot be under the age of majority or suffer from any other legal disability.
• The agreement must clearly identify the parties and the nature of their rights and obligations to one another.

In addition to the simple formalities of a proper family agreement, certain principles of contract law should also be considered, including the following:

• The parties must each enter into the agreement of their own free will, without coercion or duress by the other party, or by anyone else... like a prospective in-law.
• The parties cannot make an illegal bargain, that is, they can't form an agreement which obliges them to do something illegal or otherwise against the law.
• Where an agreement is prepared by a spouse's lawyer and the other spouse doesn't have a lawyer, any parts that are vague may be interpreted in favour of the spouse who didn't have the lawyer.
• The court will attempt to give effect to a contract wherever possible, that is, they will attempt to give meaning to the terms of a contract rather than declare it void.
• If a term of a cohabitation agreement is found to be invalid, only the invalid part of the agreement fails. The remainder of the agreement will continue to be valid and binding on the parties.

Aside from these considerations, it is also important to remember that cohabitation agreements dealing with assets or issues like spousal support are only meant to be used at some uncertain point in the future. While separation agreements are intended to work immediately from the moment they are signed, cohabitation agreements aren't intended to work until some later time, a time which may never arrive. As a result, it can be extremely difficult to guess what each party's situation will be like in the future and decide whether the agreement will remain appropriate and relevant to their circumstances. Because of these problems, hiring the services of a lawyer to prepare the agreement is highly recommended. Crafting a solid cohabitation agreement is a tricky business, especially when the agreement deals with property.

Finally, you should also know that the courts will rarely — if ever — uphold an agreement which attempts to "contract out" of a statutory obligation. Child support, for example, is a positive, almost absolute obligation a parent has towards his or her children. A court is not likely to allow an agreement to stand which provides that a parent will never have to pay child support who would otherwise be obliged to provide support.

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When a married relationship ends, the spouses can seek an order dividing the family assets under Parts 5 and 6 of the Family Relations Act. This lets legally married spouses take advantage of two very important principles:

1. married spouses are presumed to have an equal interest in all assets that qualify as "family assets;" and,
2. "family assets" includes any asset normally used for a family purpose, regardless of whether the asset is owned only by one party and regardless of whether it was bought before or during the marriage.

Unmarried couples are expressly excluded from Parts 5 and 6 of the act and do not have the benefit of these principles. As a result, the only sort of claim an umarried partner can make against assets owned by the other partner is under the law of constructive trusts and resulting trusts, and the sort of awards the court will make for trust claims like these is much, much less than the sort of awards the court would make for married couples.

The Family Relations Act, however, has a special provision for people who are common-law spouses and who have entered into a cohabitation agreement that deals with property. Section 120.1 of the act provides as follows:

This section of the act is extremely important!

• It allows common-law couples who have a cohabitation agreement to apply to court for an order for the division of assets that is different from what the agreement provides as if the agreement were a marriage agreement under s. 65 of the act, just as if the couple were married.
• It imposes a very broad definition of "family assets" on common-law couples who have executed a cohabitation agreement, as the definition that applies to "family assets" for married spouses now applies to common-law relationships. Under s. 58 of the Family Relations Act, a family asset is any asset that is normally used for a family purposes, regardless of whether it is owned only by one party or was bought into the relationship.
• Common-law couples who have executed a cohabitation agreement will likely be able to make a claim against all of the assets owned by each spouse.

As a result of s. 120.1 of the Family Relations Act, common-law spouses who would ordinarily have a difficult time staking a claim to even a tidbit of the assets held by the other spouses, will, provinding their agreement deals with property, have a much different and much broader claim to those assets. For some people, it may be best not to have a cohabitation agreement at all.

Trust law, cohabitation agreements, and the implications of s. 120.1 of the Family Relations Act are very complex subjects which this website simply cannot review in great detail. It is especially important to get proper legal advice and assistance from a lawyer if you have an issue in these areas of the law.

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