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How To Craft A Fair And Effective Cohabitation Agreement

Purchase agreement for hours with model home

Moving in together is a huge decision for people in a relationship. However, common-law partners don’t share the same protection as married couples under Ontario cohabitation law. Hence, getting a cohabitation agreement in Ontario legally serves best in the interest of both partners.

If you plan to settle down with your partner in Ontario, it is highly recommended that you sign a cohabitation agreement. This agreement will clarify the rights, responsibilities and financial arrangements for unmarried couples living together.

To craft a clear and legally binding agreement, it is essential to contact a cohabitation agreement lawyer in Ontario.

What is a Cohabitation Agreement?

A cohabitation agreement is a legally binding agreement that specifies the rights and obligations of common law partners. Over the last decade, the trend of unmarried couples living together has gone up significantly. However, unmarried couples who live together don’t enjoy the same legal and financial protection as married couples do in Ontario.

Therefore, this legal contract facilitates the protection of property rights, asset distribution, and other financial and individual interests in case of separation or dissolution. It is important to note that this agreement does not address child support or custody matters, as you can’t plan these concerns in advance. Ontario requires child support and custody (decision-making responsibility) matters to be resolved through the courts. Having said that, cohabitation agreements may contemplate the parties marrying and therefore obviate the need for a marriage contract when getting married.

When Should You Consider a Cohabitation Agreement?

Although there is no rule of thumb on when you should craft a cohabitation agreement, here are some of the scenarios when it is best to consider the contract.

  • While Moving In: A living together agreement is best to craft when a couple decides to move in. An agreement at this point provides more clarity on how both of them will handle things together. This is particularly true if the parties are purchasing property rather than renting.
  • While Buying an Asset: If you plan to buy a car, a piece of land, or a house together, it’s highly recommended to specify asset ownership or co-ownership in a cohabitation property agreement.
  • If you Have Children: If you have children from a previous relationship, you must state their parental rights. Moreover, you can also mention the education path, any specific moral training, as well as religion your child will follow.
  • When One of the Partners has a Lot of Money or Assets: When one partner enters into a relationship with lots of money or assets, it’s better to keep things clear through a cohabitation agreement.

What are the Essential Clauses in a Cohabitation Agreement?

The key points to include in a cohabitation contract are mentioned below:

  • Things Partners Buy Together: Whether it is furniture, a house, vehicles, or even joint bank accounts, everything you buy together should be added to your cohabitation agreement.
  • Gifts Both Received: The things that belong to you only, for instance, a birthday gift or a family heirloom, should also be included in the cohabitation contract to ensure these items stay with you after the split.
  • Previously Owned Property: All the stuff you own before entering into the relationship or after must be mentioned in the agreement to clarify the ownership rights.
  • Monthly Bills, Loans and Debts: Be it electric, gas, water, grocery bills, or any other joint expenses, a cohabitation agreement covers all the financial obligations that you will incur as a couple together.
  • Residency Arrangement in Case of Separation: Who will continue to live in the house in case of separation? This is an important question that must be addressed in the cohabitation agreement.
  • Mutual Investments: If you both have invested in a business or any other venture together, these details must also be mentioned in your cohabitation contract.

To discuss which clauses to include in your cohabitation agreement, contact Epstein & Associates for your Free Consultation.

What are the Benefits of a Cohabitation Agreement?

A cohabitation agreement has various benefits; the most prominent ones are mentioned here:

  1. Fosters Open Communication: Through a cohabitation agreement, a couple communicates and strategizes financial, living, and other obligations ahead of time. This on-paper arrangement ensures clarity and eliminates the chances of misunderstanding.
  2. Provides Control over Decision Making: When you don’t have a cohabitation agreement prepared, most decisions go to the courts when you split. Conversely, having everything on paper gives you the autonomy to negotiate and decide without external intervention.
  3. Ensures Privacy: A cohabitation contract makes sure that the financial and other private information of both parties is kept private even after they both part ways.
  4. Addresses Liabilities: If the partnership ends, the cohabitation agreement protects both parties from being held accountable for the debts and dues they are not entitled to or agreed to contribute.
  5. Defines Duration and Termination: This agreement specifies the duration for which a cohabitation agreement will be applicable and under which circumstances it may become ineffective.

How to Create a Cohabitation Agreement in Ontario?

A cohabitation agreement is best crafted with the help of a professional family lawyer. An expert cohabitation attorney understands the intricacies of contracts, which clauses must be included, and which points are better avoided.

These are some of the potential details a lawyer may suggest you add to your cohabitation agreement:

1. General Information

This section includes:

  • Name of both partners
  • Residence
  • The date when you start cohabitating or planning to cohabitate

2. Divide of Household Expenses

This segment talks about:

  • How will you both split the expenses?
  • Will you use a joint account or a separate account for the payment?
  • Who will pay what?

3. List Down Personal Assets

This part specifies the distribution of assets, which can be done on the following basis:

  • Assets you want to share equally
  • Assets that will be shared as per financial contribution
  • By paying half the value to the other party

4. Mention Debts

This component addresses all the debts both partners share. If you have pre-existing debts, the partner will not be obligated to pay the dues.

How Long Does a Cohabitation Agreement Last?

Typically, a cohabitation agreement lasts for an indefinite period. However, both parties may also specify a fixed duration, such as the number of years or specific circumstances under which the agreement will not be effective anymore.

Contact Epstein & Associates to Help Draft Your Cohabitation Agreement

Although we have mentioned all the important points to consider while drafting a cohabitation agreement, preparing one on its own can be overwhelming. The expert cohabitation contract lawyers at Epstein & Associates can help you craft a fair and effective cohabitation agreement that will serve best in the interest of unmarried partners.

Contact us now for a Free Consultation and discuss your goals and requirements regarding cohabitation. We will help you navigate the complexities of a cohabitation agreement in the best possible manner.