What are the Benefits of a Cohabitation Agreement, and Why do I Need One?
It is becoming increasingly common for couples to live together prior to getting married or as an alternative to marriage. When this happens, the living arrangement over time becomes recognized as a common law relationship. Many people are often under the impression that common law partners have the same rights that married couples do. However, this is not the case.
This article discusses the advantages of cohabitation agreements in accordance with the laws of British Columbia. The information discussed may not apply to other provinces and territories.
What is a cohabitation agreement?
A cohabitation agreement, also known as a common law contract, is a document that protects you and your partner’s legal rights and obligations. It provides clarity for matters that can often be strenuous when a relationship comes to an end.
A cohabitation agreement sets out the promises made by both partners to each other. Unmarried couples can enter into this agreement while living together or before they move in together. Couples can also enter into an agreement at the end of their relationship, known as a separation agreement.
Who can enter into a cohabitation agreement?
A cohabitation agreement can be entered into between “spouses” as defined under the Family Law Act. A person is a spouse if the person is:
- married to another person; or
- has lived with another person in a marriage-like relationship, and:
- has done so for a period of at least 2 years, or
- has a child with the other person for less than 2 years (except where it comes to property, debt, or pensions).
This is true even if the couple does not live together in the same house all of the time, and it applies to couples who are in same sex and opposite sex relationships.
It does not apply to unmarried couples who have been living together for at least two years, if they are not in a marriage-like relationship.
Why is it beneficial?
A cohabitation agreement allows you and your partner to agree on matters such as financial affairs, property, and various other responsibilities early on or any time during your relationship. This can ease the burden of potential legal costs and stress by reducing the risk of needing to take any legal action in the future (provided the agreement is drafted correctly). A few common reasons couples enter into cohabitation agreements are:
- PropertyCouples often agree that any property that their partner owns before moving in together will remain separate property. However, property that is acquired together, including the home you live in, is often a concern.For example, if you are moving into your partner’s home and their name is on the legal title, you may have no legal rights to it when the relationship ends.A cohabitation agreement allows you and your partner to decide how property will be dealt with if the relationship comes to an end. This includes deciding how the property will be allocated, if claims against the property can be included or excluded, the impact of debt, etc.DeathIn the absence of a will, the property the deceased partner owned would follow the rules of intestacy. This means that you may not have any rights to the home you have been living in.A cohabitation agreement can be drafted in several ways. For example, it can allow for the surviving partner to have rights in the home, a right of first refusal clause to buy the home, or the right for the surviving partner to live in the home for a number of years.
- FinancialsSpousal support is often discussed when the relationship breaks down, and this can lead to some sticky and stressful conversations. To avoid this, setting out what both individuals believe is fair in the cohabitation agreement is a good way to prevent any disagreements in this regard, and to know where you stand instead of anticipating the outcome.In the case that you make substantially more income than your partner, the agreement can set out how you will provide for your partner upon the end of the relationship, should they have any claims.
- Important and Irrevocable StepsLikely one of the most understated reasons for entering into a cohabitation agreement is when one takes life-changing steps for the benefit of the relationship. If you leave your job, relocate or decide to have children, these changes can have a significant impact on your life and your financial situation.For example: If your relationship ends with your partner, and you previously made a life-changing decision such as leaving your job to take care of the children, you may be entitled to alimony and compensation if this is included in the cohabitation agreement. Even where your partner refuses to support you, the agreement serves as a form of protection.
- Other ConsiderationsDiscussed above are some of the most common benefits of a cohabitation agreement. The agreement can also encompass other matters, such as how to deal with household expenses, children, pensions, etc.Note: A common law contract cannot discuss parental responsibilities, parental time or child support in bc. When it comes to children, decisions must be made in the best interest of the child.Revisiting and revising your cohabitation agreement is often necessary, as your common law relationship and the circumstances may change over time.
Independent legal advice
It is important that you and your partner obtain independent legal advice to ensure that the agreement is fair and that there are no surprises after you have both signed the agreement.
If you have any questions regarding any of the above, or would like to schedule a consult, please don’t hesitate to reach out to our family lawyers.
Disclaimer
The above blog post is provided for informational purposes only and has not been tailored to your specific circumstances. If you need a Cohabitation Agreement Template ask for on but this blog post does not constitute legal advice or other professional advice and may not be relied upon as such.
Citations:
- John-Paul E Boyd, QC, JP Boyd on Family Law: Resolving family law disputes in Vancouver and British Columbia, July 2020
- Family Law Act [SBC 2011]
- The Importance of a Cohabitation Agreement between Common Law Partners dated 29 July 2019, website: https://www.nbc.ca/personal/advice/taxes-and-income/cohabitation-agreement-common-law-partners.html
