When an unmarried couple decides to live together, but only one partner owns the home, a cohabitation agreement is a crucial legal document that protects both parties.
Without one, financial and property disputes can arise if the relationship ends. Understanding how a cohabitation agreement works and what to include is essential for securing both partners’ rights and responsibilities.
What Is A Cohabitation Agreement?
A cohabitation agreement is a legal contract between two people who live together in a romantic relationship, but are not married. It outlines financial commitments, property ownership, and responsibilities during the relationship and in the event of a breakup — essentially the same subjects that would be included in a prenup or marriage agreement, just without the wedding date.
Cohabitation agreements can prevent expensive and stressful legal disputes in the event of a breakup by clearly defining expectations and obligations at the beginning of the relationship.
Key Benefits of a Cohabitation Agreement:
- Protects the rights of both partners
- Clarifies financial contributions and responsibilities
- Reduces the risk of costly legal disputes
- Ensures fair treatment if the relationship ends
Why You Need a Cohabitation Agreement When One Person Owns the House
When only one person owns the home, a cohabitation agreement is especially important. There is a clear power imbalance in a situation where one romantic partner is moving into a home owned by the other.
The owning partner may be worried about risking the equity that he or she has built up in the home before the relationship started. On the other hand, the non-owning partner may be disadvantaged by not having their financial contributions to the home and its upkeep recognized, and face financial risks and housing insecurity if the relationship ends.
Family law varies in how it treats common law relationships from province to province. In some provinces, common-law spouses do not have statutory rights to division of property if the relationship ends, no matter how long the relationship lasted or how much that partner contributed. In these provinces, it is especially important for the non-owning partner to have a cohabitation agreement in place to ensure that any financial or other contributions to a family home are recognized in the event of a breakup.
In other provinces, common-law spouses have exactly the same rights as married couples, meaning that there is a right to property division in the event of a breakup. Some provinces even have specific rules relating to the home you live in together that say that any equity that one partner built in the property before the relationship began is considered family property and may be divided if the relationship ends.
In these provinces, it is especially important for the owning partner to have a cohabitation agreement in place to ensure that they can protect the equity that they built before the relationship began.
Reasons to Have a Cohabitation Agreement:
- Protect the Homeowner’s Property Rights – The owning partner can protect the equity they built before the relationship began, and set out their expectations of staying in the home if the relationship ends
- Avoid Financial Disputes – Specifies how the couple will account for financial contributions toward mortgage payments, bills, and home improvements
- Establish Rights for the Non-Owning Partner – Defines whether the non-owning partner will have any financial responsibilities or ownership interest in relation to the property
- Set Clear Expectations – Reduces misunderstandings about financial responsibilities and living arrangements
What To Include In A Cohabitation Agreement When One Person Owns The House
A well-drafted cohabitation agreement should cover key financial and property-related aspects to protect both partners.
Key Provisions to Include:
- Property Ownership: Clarifies that the home is owned by one partner and whether the other will gain any interest in it
- Financial Contributions: Details how household expenses, mortgage payments, and maintenance costs are divided
- Rent or Compensation: Specifies whether the non-owning partner will contribute rent or other financial support
- Property Improvements: Addresses how renovations or upgrades funded by the non-owning partner will be handled
- Exit Plan: Outlines what happens if the couple separates, including move-out timelines and financial settlements
How Much Does A Cohabitation Agreement Cost?
The cost of a cohabitation agreement varies based on complexity and legal fees. Here are common pricing options:
| Option | Estimated Cost |
|---|---|
| Jointly | $379 |
| Other Online Legal Services | $50 (fillable PDF) – $1500 |
| Lawyer-Drafted Basic Agreement | $1,500 – $3,000 |
| Comprehensive Lawyer-Drafted Agreement | $3,000 – $10,000+ |
Using an online legal service like Jointly offers an affordable way to create a legally valid cohabitation agreement without high legal fees.
Are Cohabitation Agreements Legally Enforceable?
Yes, cohabitation agreements are legally enforceable in Canada if they meet certain conditions:
- Written and Signed – The agreement must be in writing and signed by both partners
- Full Financial Disclosure – Both parties should disclose their financial situations to avoid future disputes. Failing to fully disclose all details about your finances could lead to your agreement being unenforceable
- Independent Legal Advice – It’s not required in all provinces, but it’s always a good idea for each partner to get independent legal advice to ensure they understand what they’re gaining or giving up by signing an agreement
- No Coercion or Duress – The agreement must be signed voluntarily by both people. If one person is pressured by the other into signing or not given an opportunity to review and think about it, it’s likely that the agreement will not be enforceable
A properly drafted cohabitation agreement ensures both partners’ rights and financial interests are protected, making it a valuable legal tool for unmarried couples living together.
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