Your Guide to the Cohabitation Agreement in Ontario

In Ontario, a Cohabitation Agreement can ensure that cohabiting partners are protected in the event of a separation. This blog explores why having a Cohabitation Agreement is important, what to include in yours, and how to create one.

Sometimes, people believe that if they live with their partner for long enough, they’ll be legally considered a married couple. However, unmarried partners don’t enjoy the same protection as their married counterparts. Unlike being married, the act of cohabiting doesn’t entitle one person to a share of the other’s property.

Within a marriage, financial gains are typically divided equally under Ontario’s Family Law Act (FLA). The net family property is determined for both individuals, and the wealthier spouse pays half of the difference to their partner. When a couple isn’t married, they cannot benefit from this equalization of family property.

However, Ontario law enables spouses in a conjugal relationship to enter a Cohabitation Agreement instead. This Agreement protects the couple financially, outlining the division of property and any support obligations should they separate.

What is Cohabitation?

Cohabitation is the act of living together. When two people are cohabiting, they’ve set up their household together in one dwelling. Although cohabitation means living together continuously, one partner may have left the home for work or business travel, family obligations, etc. For the couple to maintain their common-law status, this separation must be temporary and for a short period. 

What is a Cohabitation Agreement?

A Cohabitation Agreement is a legal contract that outlines the rights and responsibilities of an unmarried couple cohabiting together. It protects individual financial interests, and property rights should the relationship end. 

Essentially, the Agreement lays out how assets, finances, debts, and more will be treated in the event of a split. It can also address the issue of spousal support and maintenance.

What is the Purpose of a Cohabitation Agreement?

Dividing assets can be a challenge. Creating a Cohabitation Agreement is critical for protecting your best interests and enforcing your rights. This Agreement provides clarity if an unmarried couple splits up and disagrees on who gets what. It also minimizes legal fees and can avoid the need to go to court.

Protecting Property and Assets

Even if a disagreement doesn’t end up in court, separating without a Cohabitation Agreement can be traumatic. Domestic partners usually draft a Cohabitation Agreement to protect their property, debts, assets, and income. This prevents either party from making claims on the other’s assets. If you have substantial assets or own property, this Agreement offers critical protection.

In addition to protecting your best interests, this Agreement ensures critical financial considerations are transparent and agreed upon.

Avoiding Complex Court Cases

A Cohabitation Agreement helps to reduce or eliminate future disputes that may arise. This can save you time, frustration, and money. Without a contract in place, the former couple can end up in a long and costly court battle.

Rules for diving property and assets are complex should you choose to separate. It’s wise to have a Cohabitation Agreement to prevent the courts from making personal decisions for you.

When Do I Need a Cohabitation Agreement in Ontario?

In Ontario, Cohabitation Agreements are used for a wide range of situations. A couple may draft one if they plan to purchase a common-law home or be in a long-term unmarried relationship. Another reason a couple may want to create a Cohabitation Agreement is that one or both partners have a complicated financial history.

A Cohabitation Agreement is typically used to:

• Clarify how property is to be divided
• Outline what happens if spouses contribute to one another’s property
• Determine how assets will be divided when partners purchased them together
• Detail how each person’s debts will be managed
• Outline the terms of repayment for shared debts
• Clarify spousal support payment details
• Detail how the Agreement will be revisited due to major life changes post-separation
• State who will move out of the home if applicable
• Outline household expenses and shared finances

Common-law Relationship vs. Marriage

A common-law couple may believe that after cohabiting together for years, they’re as good as married. While this can be true in some ways — especially with regard to living together and building a family — it isn’t accurate. In Ontario, two people are considered common-law partners if they’ve been continuously living together in a conjugal relationship for at least three years. However, if a couple has lived together for one year or more, and shares a biological or adopted child, they’re considered common-law.

A common-law couple may be eligible for:

• Access to certain programs and benefits
• Inheritances if one spouse dies without creating a Last Will
• The ability to file joint tax returns

That said, Ontario law treats a common-law relationship and a formal marriage very differently. These differences come to light when looking at matters such as separation, division of assets, and ownership of property. While common-law couples don’t receive the same protection as married spouses, a Cohabitation Agreement can provide this protection regardless of marital status.  

If you’re required to prove your common-law status, see our free Statutory Declaration of Common-Law Union template. 

What Details Should a Cohabitation Agreement Contain?

A Cohabitation Agreement is a highly personal legal document that varies from couple to couple. There are no rules about what terms you have to agree on in your Agreement. That said, you should be as clear and detailed as possible. 

Fundamentally, your Agreement should contain your and your partner’s personal information.  This includes your full legal names, address, respective occupations, and the date you began cohabiting. In addition, the following information can be included in your Agreement:

The Division of Tasks and Expenses

You and your partner can outline how you’ll be dividing household expenses during cohabitation. For instance, certain expenses can be taken from a joint account, while others are split between the two of you. Often, couples split expenses by type, income, and percentage. 

Further, you can outline any significant non-monetary rights and obligations. These can include which tasks each of you is responsible for and which are shared.

Address Personal Assets

You may own assets that you want to keep separate from your relationship. As such, you can list the assets you want to keep to yourself in your Cohabitation Agreement. This will ensure that your partner doesn’t have access to them should the relationship dissolve.

Alternatively, you can also list the assets you’d like to share with your partner in your Agreement. These can include property, vehicles, and more. You can divide these assets equally, or based on each partner’s financial situation or contribution. Should you separate, another option is to pay out the value of an asset to your partner so they have total ownership.

Division and Ownership of Property

You can detail who owns what property and how you want to divide ownership in the case of a future separation. In addition to real estate, “property” can include bank accounts, jewellery, pensions, and business assets. 

You can state any intentions to keep property separate to prevent future claims for unjust enrichment, constructive trust, and joint family venture. Doing so will give you control over your property, and enable you to set terms according to your wishes. If you don’t add these details to your Agreement, the courts may decide these matters for you.

Additionally, it’s a good idea to include any property inheritances going to your partner in the event of your passing. If you don’t have a Will or a Trust, a Cohabitation Agreement can ensure that your wishes are honoured. 

Debt Details

In addition to assets, it’s important to address personal and shared debts in your Cohabitation Agreement. If you or your partner had acquired debts before living together, you can specify who will be responsible for repaying them. Conversely, you can specify which of your debts are shared, and how they’ll be split during repayment.

Child Support and Education

In Ontario, if you have dependent children with your partner or from a previous relationship, you can include them in your Agreement. You can outline how you will navigate children’s moral training, child support obligations, and children’s education. 

This includes how you’ll raise them, which religion they’ll practice, which educational path they’ll pursue, and more. Adding these details ensures that you and your partner are on the same page about important matters concerning children.

However, the Agreement should not address decision-making responsibility for children (formerly known as custody) or parenting time (formerly known as access). Instead, you can include these details in a Separation Agreement. Ultimately, the courts will consider the best interest of the child(ren) when dealing with child custody matters. 

Spousal Support Obligations

Spousal support obligations can be set out in your Ontario Cohabitation Agreement and enforced. Failing to include this information can put either partner at a disadvantage if the relationship is terminated. You can also include spousal support limitations or releases based on changing circumstances, such as remarriage.

Is an Ontario Cohabitation Agreement Legally Binding?

As long as your Cohabitation Agreement meets the requirements for a valid domestic contract under Ontario Law, it’s legally binding. If anyone wants to challenge your Cohabitation Agreement, the onus is on them to prove that it’s invalid in court.

Similar to any contract, certain elements must be present for your Agreement to be legally enforceable. These include:

• Offer and Acceptance: You create an Agreement, negotiate its terms, and both sign the document.
• Consideration: Each party must exchange something of value and benefit from it. This includes spousal rights, the sharing of assets, and more.
• Mutuality: Each party must have truthful intentions when entering into the contract.
• Legality: The terms of your Cohabitation Agreement should never break the law. Anything that violates Ontario law will render your Agreement unenforceable.
• Capacity: You and your partner must be legal adults of sound mind when entering into the contract.

In addition, a Cohabitation Agreement must:

• Be made in writing;
• Be signed and dated by each partner, in the presence of two witnesses — one for each partner’s signature;
• Be signed and dated by each witness;
• Be signed by partners and witnesses who are 18 years of age or older;
• Identify both partners and clearly detail the nature of their rights and obligations;
• Be signed once both parties have disclosed their respective  assets, liabilities and circumstances. The absence of full financial disclosure may render the Agreement invalid.

Can a Cohabitation Agreement be Changed in Ontario?

In Ontario, both parties can update or cancel their Cohabitation Agreement as their relationship evolves. Reviewing and updating your Agreement annually is a good idea to reflect any changes in your relationship.

For instance, one party may have had a modest income when they began cohabiting with their partner. Let’s say their Cohabitation Agreement stated that they’re to be paid alimony in the event of a separation. A year later, maybe the situation reverses; the higher-earning partner loses their job, while the other is promoted. This couple would want to modify their Agreement to reflect their new circumstances.

If you have a multitude of changes to make, you can also draft a new Agreement and sign it before two witnesses. This automatically cancels the previous version of the Agreement. Both partners must agree to the changes and sign the new Cohabitation Agreement.

Does a Cohabitation Agreement Need to Be Notarized in Ontario?

Your agreement needs to be witnessed by two witnesses over the age of 18. However, Ontario law doesn’t require your witnesses to be authorized officials, like lawyers or paralegals. That said, we recommend having your Agreement notarized by a notary public to give it more credibility.

Notarization provides strong evidence of your Cohabitation Agreement’s validity and authenticity. It reduces the chances of your Agreement’s legitimacy being questioned in a court of law. Additionally, notarization is important if you plan to use your Cohabitation Agreement internationally. This is because notarization may be a requirement in jurisdictions beyond Canadian borders. Notarization is especially useful if you plan to use your agreement for immigration or international travel.

NotaryPro provides you with both witnesses during notarization; click here to have your agreement finalized online, in under 7 minutes. Meet with a notary online, from the comfort of your home or office, with a same-day appointment.

Draft an Ontario Cohabitation Agreement Today

Drafting a Cohabitation Agreement is easier than ever with our customizable Ontario Cohabitation Agreement template. Our template is free and easy to use. Simply fill in the applicable sections and have a perfectly formatted Cohabitation Agreement sent to your email.

The best part? You don’t have to find two witnesses to seal the deal. Once your Agreement is completed and both parties are ready to sign, you can have it witnessed online with NotaryPro. 

Head to our online notary and choose the option ‘notarize a document (digitally sign)’. Then, upload your document and schedule an appointment that works best for you.