Cohabitation agreements, also known as "living together agreements," are executed before or shortly after a couple starts living together. A couple may enter into a cohabitation agreement with the intention of addressing things that might happen during the time they live together, while they cohabit, but cohabitation agreements are most often intended to address the issues that might arise if their relationship breaks down. There is no legal requirement that you must enter into such an agreement if you're living with someone or plan on living with someone, and you can't be forced to sign a cohabitation agreement.

A. Unmarried Couples and Cohabitation Agreements

The big difference between marriage agreements and cohabitation agreements is that couples who sign a cohabitation agreement aren't married and don't intend to get married, at least not just yet. As a result, it's important to understand exactly how the legal status of unmarried couples differs from that of married couples before even thinking about the idea of a cohabitation agreement. This segment will provide a brief discussion of this topic; the Unmarried Couples section should be read for a better understanding of these issues.

Married couples have been legally married, either by a civil ceremony performed by a marriage commissioner or in a religious ceremony performed by a religious official. An unmarried couple will become "common-law," for the purposes of the Family Relations Act, after they've lived together in a "marriage-like relationship" for two years. Unmarried couples, including common-law couples, are not legally married to one another.

For the purposes of this chapter, the criticial distinction between married spouses, common-law partners and couples who have lived together for less than two years lies in the different legal issues that arise when these different sorts of relationship come to an end. Here's a summary:

	Married Spouses	Common-Law Partners	Other Couples
Care of Children	Yes	Yes	Yes
Child Support	Yes	Yes	Yes
Spousal Support	Yes	Yes
Family Assets	Yes
Trust Claims to Assets	Yes	Yes	Yes

Issues relating to the care and control and financial support of children born in the relationship are fairly straightforward, since the claim mostly depends on whether someone is a parent, not on the nature of the relationship between the parties. With respect to spousal support, only married and common-law couples may make a claim. Issues relating to property are a bit more complex.

Only married couples can make a claim for the division of assets under the Family Relations Act. Since unmarried couples can't apply for the division of assets under the Family Relations Act, they can only make a claim against assets owned by the other under the law of trusts, usually the law relating to constructive trusts, express trusts or resulting trusts. (If the couple jointly owns real property together they can also make a claim under the Partition of Property Act.) Trust claims are a lot more complex than making a claim under legislation, and, even if the trust claim is successful, the amount awarded is generally a lot less than what the result would have been had the couple been married.

Under s. 120.1 of the Family Relations Act, however, common-law couples can "opt in" to the parts of the act that deal with the division of assets as if they were married also long as they have cohabitation agreement that deals with the division of assets. This means that a fair division of assets for unmarried couples with a cohabitation agreement is presumed to be an equal division of assets, regardless of whether the assets were brought into the relationship or not, just as if the couple were married. In other words, if you want a cohabitation agreement to protect property brought into a relationship, you will usually be better off not having any agreement at all.

This issue is discussed in a lot more detail in later in this chapter. Trust claims to assets are discussed in the chapter Family Assets > Dividing Assets.

B. Deciding Whether a Cohabitation Agreement is Appropriate

The usual reason why a couples enter into cohabitation agreements is to protect their respective property and finances, so that each party's assets going into a relationship are preserved as much as possible if the relationship comes to an end. Sometimes a party wants to preserve property from claims by the other party; sometimes a party wants to protect property from the other party's debts. Generally speaking, most couples who are thinking about executing a cohabitation agreement want a "I'll keep what's mine, you'll keep what's yours" sort of deal. Curiously, as was just mentioned and as will be explained later, this is precisely the wrong reason to have a cohabitation agreement.

Cohabitation agreements are usually entered into when:

1. the relationship is expected to be a long one;
2. one or both parties have a substantial amount of assets going into the relationship;
3. one of the parties has significantly more income than the other;
4. the couple anticipate living in a home owned by one of the parties;
5. one or both parties expect to acquire substantial assets during the relationship from, for example, an inheritance, a court award, a gift or employment income;
6. one or both parties has significant debts going into the relationship;
7. one or both parties is bringing a child into the relationship; or,
8. the parties expect that spousal support may be an issue if the relationship ends.

Cohabitation agreements are generally not appropriate when:

1. the couple are young;
2. the point of the agreement is to avoid sharing assets that are brought into or acquired during the relationship;
3. neither party has significant assets or income going into the relationship;
4. neither party is bringing any children into the relationship; or,
5. both parties are working out of the home and expect to continue working out of the home.

Cohabitation agreements can also be useful to set rules for how the parties will manage things during the relationship, although this type of cohabitation agreement is fairly rare. When a cohabitation agreement is needed to deal with those issues, the parties' financial positions may not be relevant.

The usual sort of issues a household management type of cohabitation agreement might be intended to address include:

• Who will pay for the household expenses? Will each party pay for a specific set of bills, or will the parties share in all the bills in a fixed amount?
• Will the parties keep separate bank accounts, or will they have a joint account for household costs? If there is a joint account, how will each party contribute to the account?
• Who will do the household chores? Will each party be responsible for a list of particular tasks?
• How will children brought into the relationship be cared for? Will the other party assume any parenting responsibilities?

If, at the end of the day, a cohabitation agreement is appropriate and desireable, the parties will negotiate the terms of the agreement, and someone, whether a lawyer or one of the parties, will draft the written agreement. As with all family law agreements, it is important that both parties get independent legal advice about what exactly the agreement means, how it affects their present rights and responsibilities towards one another, and how it will affect those rights and responsibilities if their relationship comes to an end. Getting independent legal advice strengthens the agreement by preventing one spouse from saying "I didn't know what it meant!" if the agreement is challenged later on.

Finally, a good cohabitation agreement should specify that the agreement will terminate if the parties marry, or that the agreement will become a marriage agreement if the parties marry. Either way, the prospect of marriage and its impact on the cohabitation agreement should be dealt with in some manner.

C. Avoid Do-It-Yourself Cohabitation Agreement Kits

Staples, Chapters, London Drugs and other stores generally carry a wide range of DIY legal products, from doing your own will to getting your own divorce.

In my view most of these do-it-yourself kits are fine for most people most of the time. They are not fine for cohabitation agreements. Cohabitation agreements can be terribly complicated, more so than marriage agreements or separation agreements, and must be drafted with a good knowledge of family law in general and cohabitation agreements in particular. I really encourage you against do-it-yourself cohabitation agreement kits.

If you figure that you absolutely must have a cohabitation agreement, it's well worth $1,000 to $3,000 to pay a lawyer to draw it up correctly for you, rather than spend $10,000 to $30,000 on lawyer's fees down the road if the agreement is flawed.

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We've already talked about when cohabitation agreements generally aren't appropriate, such as when a couple are young, have no children, and don't have high incomes or large debts to worry about. This segment is about the other big reason, an unusual and generally unexpected reason, why cohabitation agreements should be avoided: when the primary purpose of the agreement is to protect assets brought into or acquired during the relationship.

This is a complicated segment but it'll be well worth your time if you want a cohabitation agreement because you want to protect your property. Pay close attention, because you need to understand a bit of the law on property division for married couples before you understand why a cohabitation is precisely the thing you want to avoid.

When a married relationship ends, the spouses can seek an order dividing the family assets between them under Parts 5 and 6 of the Family Relations Act. This lets legally married spouses take advantage of two very important principles:

1. married spouses are presumed to have an equal interest in all assets that qualify as "family assets;" and,
2. "family assets" is a very broad term which includes any asset normally used for a family purpose, regardless of whether the asset is owned only by one party or jointly by both, and regardless of whether it was bought before or bought during the marriage.

Unmarried couples are expressly excluded from Parts 5 and 6 of the act and do not have the benefit of these principles. As a result, the only sort of claim an umarried partner can make against assets owned by the other partner is under the common law of trusts, and the sort of awards the court will make for trust claims like these is much, much less than the sort of awards the court would make for married couples.

The Family Relations Act, however, has a special provision for people who are common-law spouses and who have entered into a cohabitation agreement that deals with property. Section 120.1 of the act provides as follows:

This section of the act is extremely important.

• It allows common-law couples who have a cohabitation agreement to apply to court for an order for the division of assets that is different from what the agreement provides, as if the agreement were a marriage agreement under s. 65 of the act and as if the couple had been married.
• It imposes a very broad definition of "family assets" on common-law couples who have executed a cohabitation agreement, as the definition of family assets that applies to married spouses now applies to common-law relationships. Under s. 58 of the Family Relations Act, a family asset is any asset that is normally used for a family purpose, regardless of whether it is owned only by one party or was bought into the relationship, and generally almost all assets will qualify as family assets.
• Common-law couples who have executed a cohabitation agreement will likely be able to make a claim against all of the assets owned by each party.
• The standards that apply to dividing assets between married spouses will apply to common-law relationships, most importantly the presumption that a fair division of assets is an equal division of assets, and this notion of fairness is the measure against which a cohabitation agreement will be judged.

As a result of s. 120.1 of the Family Relations Act, common-law partners who would ordinarily have a difficult time staking a claim to even a tidbit of the assets held by the other spouses, will, as long as their cohabitation agreement deals with property, have a much different and much broader claim to those assets, a claim equal to what they would have had if they were married.

For most people, it will usually be best not to have a cohabitation agreement at all.

Trust law, cohabitation agreements, and the implications of s. 120.1 of the Family Relations Act are very complex subjects which I simply can't cover in as much detail as they deserve. It is especially important to get proper legal advice and assistance from a family law lawyer if you have an issue involving these areas of the law.

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The point of entering into a cohabitation agreement is so that, at some later time, the contract will be enforceable in court if the parties fail to live up to it. As such, a cohabitation agreement, just like any other family law agreement, must conform to certain basic rules, including the following:

• A cohabitation agreement must be set out in writing.
• The agreement should be signed by each party in the presence of a witness.
• The parties shouldn't be under the age of majority or suffer from any other legal disability.
• The agreement must clearly identify the parties and the nature of their rights and obligations to one another.

In addition to these simple formalities of a proper family law agreement, certain principles of contract law should also be considered, including the following:

• The parties must each enter into the agreement of their own free will, without any coercion or duress by the other party, or by anyone else.
• Both parties must make full and complete disclosure of their circumstances going into the agreement.
• The parties cannot make an illegal bargain, that is, they can't form an agreement which obliges them to do something illegal or otherwise against the law.
• Where an agreement is prepared by one party's lawyer and the other party doesn't have a lawyer, any portions of the agreeement that are vague may be interpreted in favour of the party who didn't have the lawyer.
• The court will attempt to give effect to a contract wherever possible, that is, they will attempt to give meaning to the terms of a contract rather than declare it void.
• If a term of a cohabitation agreement is found to be invalid, only the invalid part of the agreement fails. The remainder of the agreement will continue to be valid and binding on the parties.

Aside from these considerations, it is also important to remember that cohabitation agreements dealing with assets or issues like spousal support are usually only meant to be used when the relationship comes to an end, at some uncertain time in the future. While separation agreements are intended to work immediately from the moment they are signed, cohabitation agreements aren't usually intended to work until some unknown future date. As a result, it can be extremely difficult to guess what each party's situation will be like in the future and decide whether the agreement will remain appropriate, fair and relevant to their circumstances. Because of these problems, hiring the services of a lawyer to prepare the agreement is highly recommended. Crafting a solid cohabitation agreement is a tricky business at the best of times.

Finally, you should also know that the courts will rarely — if ever — uphold an agreement which attempts to contract out of a statutory obligation. Child support, for example, is a positive, almost absolute obligation a parent has towards his or her children. A court is not likely to allow an agreement to stand which provides that a parent will never have to pay child support who would otherwise be obliged to provide support.

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