Are you in a Common Law relationship?

Most people don’t realize that common law couples may not be able to walk away from a relationship with all their assets intact.  What’s yours is yours and what’s mine is mine might not actually be the case.  Common law claims can be very complicated to respond to and can result in a very expensive and stressful breakup.   

A cohabitation agreement is an agreement between a couple who chooses to live together but not get married about what happens to their property and sometimes support, if they breakup.  

Couples who cohabitate may be considered to be in a “common law” relationship and are subject to many of the same family laws, rights and obligations as a married couple when it comes to property and support.

A cohabitation agreement formalizes the rights and obligations of each partner in the relationship and outlines what happens on separation.  Although married couples have specific legal protections under Ontario’s Family Law Act in case of divorce, unmarried couples may have a claim to the other’s assets, depending on the circumstances of their relationship and in other cases they may have little legal recourse against one another if they choose to separate.  Assets that are particularly vulnerable to a claim include property – the home you are living in, cottages and even pensions.

Couples living together often jointly contribute to the accumulation of property during their relationship, including real estate, vehicles, and investments. Deciding which partner gets what asset during a breakup can quickly become contentious. 

With a cohabitation agreement, couples can establish fair division of property in the event of a breakup. Property rights, the right to financial support following a breakup, or the right to inherit from each other’s estates, can be included. Cohabitation agreements help avoid the need for litigation involving claims of unjust enrichment and the common law trust doctrine.

 A couple intending to live together or couples who have already moved in together may create a Cohabitation Agreement. This agreement can be drafted and signed even if you have been living together for many years.  It just needs to be signed prior to break up.  The terms of a cohabitation agreement can vary greatly depending on a couple’s specific circumstances, finances, and goals.

Although different from a prenuptial agreement/marriage contract, cohabitation agreements often cover many of the same details. 

Cohabitation agreements can automatically become a marriage contract if the couple later gets married. However, cohabitation agreements cannot cover certain topics, like parenting time (child custody) and decision making for children. This is dealt with by the couple and if necessary the judge, at the time of separation.

Your cohabitation agreement should reflect the parties’ specific circumstances and goals. 

If you and your partner choose to maintain financial independence from one another, your cohabitation agreement can state that neither partner can claim the property of the other, each partner will bear child expenses for the children they’ve brought into the relationship, the partners will maintain separate financial accounts, and neither can claim support after separation. 

Conversely, partners who are more financially intertwined may craft a cohabitation agreement giving each partner rights to property brought into and acquired during the relationship, no matter whose name is on the title.