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Cohabitation Agreement

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A “cohabitation agreement” is a contract that helps unmarried couples protect themselves financially in the event of a separation. It’s common for partners not to determine what will happen to their finances during cohabitation, which can lead to problems should things go south. For example, if one person started planning for retirement while the other person did not, there could be an imbalance of the future earning potential. A cohabitation agreement can help address this issue, and many others, by determining who will pay for what if cohabitation ends in separation.

Cohabitation agreements are often modelled after marriage contracts or Prenuptial Agreements, but they don’t have to be. There are enough differences between cohabiting and married couples that cohabitation agreements can be tailored to cohabitants’ needs. The rules will depend on the situation, but cohabitants might want to consider how they will co-parent children if cohabitation ends, whether one partner is still supporting another financially after separation, and who will keep what property in their possession.

In many cohabitation agreements, cohabitants determine how their property will be divided if cohabitation ends. This can include who keeps what debt or which partner receives an increased value of a home after a breakup. Although there are certain rules for dividing up property under the Family Property Act, for “common law” partners, should the parties not wish to follow those rules, they need to have an agreement in place.

Cohabitation agreements can also address issues that arise during cohabitation itself, such as division of roles, household maintenance and other cohabitation responsibilities.

If cohabiting partners decide to change the cohabitation agreement, they must put it in writing and both cohabitants must sign for the new version of the contract. Additionally, anytime a cohabitation agreement is created or changed, each person should get independent legal advice about what they are signing.

Prior to cohabiting with a partner, individuals should seek legal advice from a family lawyer if they are unsure how cohabitation will affect their future finances.

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