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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, cohabitation agreements are gaining in popularity. Couples often use a cohabitation agreement, but it can benefit anyone living in a property they share with another person. Making a cohabitation agreement can help couples plan for the future and address the concerns of everyone involved. 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. In British Columbia, it is becoming increasingly common for friends and family to 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 for the property and prevent future conflict. Couples more commonly use cohabitation agreements to confirm the property’s ownership details and each partner’s respective financial or maintenance responsibilities. 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 draft cohabitation agreements for a variety of reasons, and lawyers can tailor the documents for their specific needs. 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.

Unmarried couples commonly include these provisions in their cohabitation agreements to safeguard both partners’ interests should they separate. One of the most common issues dealt with in cohabitation agreements is to identify a “fair” division of assets should they need to separate.

For instance, partners can use a cohabitation agreement to address a situation where one partner owns a house, but both partners equally share the monthly mortgage payments. This arrangement often poses a problem for many couples because, in the event of a split, the partner who owns the house solely owns the portion of home equity that both partners contributed to equally. 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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