Living with your partner just got easier
In Ontario, you are considered common-law partners after living together in a conjugal relationship for three years or more, or one year with a child
You do not need to be considered common-law partners to claim constructive trust against your partner's property or business
cohabitation agreements can become marriage contracts in the event of marriage and separation agreements in the event of separation or divorce
both parties must sign the agreement for it to be binding
Moving in with your partner is a wonderful step in the relationship. The excitement of finding a place to live, negotiating the terms of closet space and "accidentally" redirecting the bean bag chair to the dump are important. But before canceling the lease on your one-bedroom apartment, first consider the legal consequences of cohabitation.
Although common-law relationships are not subject to the same legal regulations as married couples when it comes to property; they are subject to a number of other remedies that most people are not aware of. For example, did you know that you may be liable to pay spousals support to your partner after separation? Or in the event you have a house in your name, did you know your partner could claim some interest to the property under "constructive trust"? Perhaps you have a business that your common law partner is contributing to in some manner - they may have entitlement to it's value after separation.
There are a number of remedies under the Family Law Act, Succession Reform Act and precedents that apply to common law partners. This is often based on the specific facts of each relationship, the duration of the cohabitation, the income of each party and the roles you each play in the relationship. The misconception that your assets are protected because you are not married is often incorrect. As a result couples find themselves in expensive legal proceedings.
Common law partners can protect themselves with cohabitation agreements.
These agreements are designed to allow you to effectively set out the parties' intention in a legally binding manner. For instance, the parties can:
waive their rights to spousal support or negotiate the duration and quantum in advance;
exclude any property they have presently or may acquire in the future from division of assets;
opt out of constructive trust claims;
set out the structure on how property will be held by parties should they purchase a property together during the relationship;
exclude business interest and income from division; and,
Cohabitation agreements will help parties discuss important, yet difficult, issues that will help them understand each other's expectations during the relationships. The agreement can be drafted to become a marriage contract once you get married and a separation agreement in the event of separation or divorce. This will save future legal fees.
Although there are numerous templates on the internet, be sure to have a lawyer review them before execution as necessary legal provisions are often missing. A small error or failure to include a provision may prove critical and result in a court procedure setting aside the agreement. Our cohabitation agreements are well drafted and designed specifically for each individual case; as a result they are usually over 20 pages in length. Contact us for a free consultation.