The Importance of a Cohabitation Agreement Between Common-Law Partners

29 July 2019 by National Bank of Canada
Common-law partners

You are perfectly in love, so you decide to move in together, to start a family... However, if we are to believe the experts, one day the wind will change, and the promises exchanged may disappear. The questions that then emerge look like this: as common-law partners, what are my rights? Are they the same rights married couples have? The answer is no. Nevertheless, there is a solution to protect you and your spouse in the event of separation or death: a cohabitation agreement. 

1. What is a cohabitation agreement?

As common-law partners, even if you have been living together for a number of years, you do not have the same rights as married couples. For example, the rules for sharing assets are different. The cohabitation agreement is a solution that legally recognizes certain obligations negotiated between both partners. This agreement is also known as a common-law contract, a cohabitation contract or a contract between common-law spouses.

Cohabitation agreements allow you, among other things, to agree on:

  • Shared responsibilities and the contributions of each partner while living together;
  • Property and debt that each person has when they begin cohabitating;
  • How to divide common property in the event of separation;
  • The terms of debt repayment in the event of separation;
  • The payment of a sum of money, such as alimony, to one of the spouses in the event of separation;
  • The terms of review of the agreement in the event of changes in the situation of a partner after separation.

They apply to both same-sex couples as well as opposite-sex couples. It can include anything you feel is necessary, making it possible to better manage the unexpected and ensure the division of property and obligations within the household in the event of separation or death.

2. What are the legal advantages?

A cohabitation agreement is valid in a court of law even if it has not been notarized. Whether done formally between spouses, with a witness, with a professional, or online, it offers legal protection and can be changed as needed.

Here are three concrete scenarios to demonstrate its value:

Separation: Preventing inequalities

A woman decides to leave her common-law partner. At the beginning of their relationship, they agreed she would quit her job to take care of their children. Following their breakup, she finds herself in a precarious financial situation and her spouse refuses to help her. Fortunately, since their cohabitation agreement detailed alimony and a compensation amount, she is protected.

Death: Honouring last wishes

Two women live together for 10 years in a house that belongs to one of them. They are not married. Following an accident, the owner of the house dies. She wanted to give the house to her common-law partner instead of her children. According to the law, in the absence of marriage and a will, the children of the deceased get the property. To avoid such a situation, their cohabitation agreement may include a right of first refusal clause, which allows the partner to buy the house. Or, it may include a dwelling right clause to continue living in the home for a specified period after the owner's death.

New realities: Evolving over the years

When a woman first moved in with her common-law partner, she had a modest income. Their cohabitation agreement stipulated that she was to be paid alimony in the case of separation. In the last year, the situation was reversed: her partner lost his job and became a salaried employee. They then modified their agreement to reflect this new reality.

3. How to write a good cohabitation agreement

You can prepare and draft your agreement yourself, with a witness, notary or lawyer, or fill out a form online. You will have the same legal protection in all cases.

Be aware, however, that for a cohabitation agreement to be valid, you must:

  • Be of age of consent and have not been declared unfit;
  • Consent freely with full knowledge of the facts.

Finally, consider updating the contract regularly as soon as a change occurs in your living situation. Experts recommend that you read it at least once a year and update it as needed.

4. What should be included in a cohabitation agreement?

Each agreement is unique and varies according to your wishes and priorities. Here is a list of elements that are found most often in an agreement:

  • Basic information: Full names, address and occupations of partners.
  • Cohabitation: The rights and obligations of the spouses, the sharing of tasks and property, the impact of children on the shared living situation.
  • Separation: The division of property and the home, the repayment of debt, as well as alimony.
  • Death: Estate planning that can protect the surviving spouse.
  • Other special clauses: Any clause the couple decides on together and that does not contravene public order.

Moreover, even if a cohabitation agreement doesn’t follow a precise model, it is valid. It is recommended that you consult a lawyer or notary to avoid misinterpretations and omissions of important items, but additional fees may be incurred.

You can download an example of a cohabitation agreement from the Department of Justice website, where you will find other useful information and tips.

5. Are common-law partners protected the same way everywhere in Canada?

Common-law relationships fall under provincial and territorial jurisdiction in Canada. Elsewhere in Canada, common-law relationships result in maintenance obligations that vary by province. A legal agreement may be required by law.

Following a surge in common-law partnerships in British Columbia in 2013, the Family Act was passed. It grants the same rights as married couples to common-law partners who have been living together for at least two years.

Cohabitation agreements give you legal protection, which can help complete your will and testament. It touches on the most fundamental aspects of your life together and reflects your values, in addition to translating your desire to help one another.

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