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Cohabitation Agreements: The Basics

Cohabitation Agreements: The Basics

Post Series: Family Law

As housing markets around the world make living alone unattainable for many, and as modern relationship norms change, cohabitation agreements are gaining in popularity. A cohabitation agreement is often used by couples, but can be useful to anyone who lives in a property they share jointly with another person. Making an agreement with someone you live with (regardless of the circumstances for living together) can be a great way to plan for the future and is a fair way to address the concerns of everyone involved if the unforeseen need to part ways arises. People considering a cohabitation agreement should remember that it is a legally binding contract.

Reasons For Drafting a Cohabitation Agreement

There are various reasons people may feel a cohabitation agreement is right for their relationship or living situation. For British Columbia in particular, it is becoming increasingly common for friends, family, or business partners to live in or buy property jointly to enable affordability. If they choose to live in the property together, a cohabitation agreement is an important opportunity to discuss and finalize their plans and responsibilities for the property and is an opportunity to prevent future conflict. More commonly, cohabitation agreements are used by couples to acknowledge the ownership details of the property and the respective financial or maintenance responsibilities of each partner. They are particularly important for unmarried couples who have children. Cohabitation agreements can also be an important part of one’s estate plan, especially if they have an adult child or caretaker living in their house full-time. 

Terms of Cohabitation Agreements

People make cohabitation agreements for a variety of reasons, and the documents are drafted according to the specific needs of the people signing them. Because of the highly customizable nature of these contracts, consultation with a legal professional is essential to understand the full scope of your options. The most common provisions in cohabitation agreements for unmarried couples include:

  • Respective responsibilities of the partners for care and maintenance of the property
  • How the property or equity in the property will be divided should they separate
  • Identification of shared debts and terms of individual repayment should they separate
It is a good idea for couples to set out specific financial responsibilities for each partner in their cohabitation agreement.

These provisions are very common in cohabitation agreements between unmarried couples and are meant to protect the interests of both partners should they separate in the future. One of the most common issues dealt with in cohabitation agreements is to identify a “fair” division of assets should they need to separate.

As an example, a cohabitation agreement can be used to address the situation where a house which is owned only by one partner, but where both partners share monthly mortgage payments equally. For many couples, this creates a problem because in the event of a split, the portion of equity in the home that both partners contributed to equally is owned solely by the partner who owns the house. This can result in one person leaving the relationship facing disproportionate financial harm. There are various ways a cohabitation agreement could address this issue with a home or any other shared asset, and creating the agreement helps couples feel prepared in the event of a separation. 

The “Marriage-Like Relationship”

In British Columbia courts have identified common law spouses, where two people live together for at least two years in a marriage like relationship, as having many of the same rights as those with a traditional legal marriage. In the event of a financial dispute following the separation of partners who meet these criteria, the nature of the cohabitating relationship could be very important in determining the rights of each person involved. To be certain of what will happen to your assets in the event of a shared relationship, a cohabitation agreement or relationship agreement is essential. If you’re considering creating your own cohabitation agreement, contact an experienced lawyer today. We’ll ensure the agreement is carefully written the specific needs of your situation.

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