Keeping it Common-Law: Cohabitation Agreements

January 17, 2019

The number of common-law unions is steadily increasing and yet there are misconceptions about the rights and obligations of non-married partners following a breakup. Some wrongly assume that common-law spouses are entitled to the same rights as married couples while others wrongly assume that they have no rights at all.

 

And then there are those, let’s call them hopeless romantics, who do not need any legal protection. After all, their relationship is perfect.   

 

Consider the following two scenarios:

 

You think you’ve found the one. Your relationship is strong but neither of you are in a rush to get married. You break your lease and move into your partner’s apartment. Maybe you contribute to the mortgage or the maintenance fees.  You cook and clean. You buy the groceries and add nice touches to what you consider your home. Paint the walls, fix the leaky facet.  You’ve stopped saving for your own property and spoil your partner instead.

 

Eight years later, the love fades and you break up.

 

You’re left with nothing but the curtains and the sheets you’ve once purchased.

 

FACT: Unlike married couples, common-law partners do not have automatic rights to property. Post breakup, each person is entitled to those assets that are in their own name, no different from what they would be entitled to if they lived with a stranger. Jointly owned items are divided evenly.

 

Where one partner has made significant contributions to an asset and it would be unfair for the other to benefit from such contributions, there are legal remedies based on principles of fairness. A common example of which is where a partner has made substantial renovations or contributed time or financial resources to a home but is not on the legal title. The legal arguments to prove such a case are complicated and often lead to long and expensive court proceedings.
 

***

 

You’re comfortable in your relationship. Your partner moves into your apartment. Maybe they’re a bit unmotivated, working odd jobs and struggling to pay bills on time. Maybe they’re an entrepreneur, continually coming up with new business ventures but never following through. Whether they are a free spirit, or a couch potato, you love them anyways. You think, “they’ll grow out of it. Over time, they’ll become more mature and financially responsible.” They never do.

 

Five years later, the love fades and you break up.

 

Your ex moves out. You cut your losses and forget the fact that they’ve never contributed to rent, groceries, or the household chores. You can’t believe you wasted eight years of your life. To make matters worse, you now owe monthly spousal support.

 

FACT: In Ontario, the law does not require a legal marriage for a partner to claim spousal support. If one partner earns a higher income and supports the other over a continuous period of the relationship, spousal support is likely to be granted to the lower earning partner.

 

***

To ensure you do not find yourself in either of the above situations, you may wish to enter into a Cohabitation Agreement. This Agreement allows two non-married partners who are living or planning to live together to outline rights, obligations and how assets are to be divided in the event of a breakup.

 

There is nothing romantic about getting your partner to sign a Cohabitation Agreement before hiring the U-Haul. No one wants to discuss the possibility of a breakup, nor does anyone wish to disclose all their financial information to someone they’ve just began dating.

 

However, the more uncomfortable it is to discuss living arrangements and financial matters with your partner, the more likely you’ll need a Cohabitation Agreement. Whether you shack up for love or for the convenience, you want to ensure you and your partner are both on the same page when it comes to property division.

 

It’s better to have one awkward conversation at the start of the relationship, than to find yourself amid both a breakup and a legal battle.

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