Congratulations! You have survived spending months of COVID-19 lockdowns with your significant other and still love each other! Perhaps you have now both decided that you are ready to move in together permanently. While the thought of a possible separation in the future is not at the forefront of your mind when you are in the process of happily building a life together, there are certain legal implications that are much easier and less stressful to address at the outset of your cohabitation, rather than in the unfortunate event of a separation.

When you and your intimate partner 1) cohabit for at least three years, 2) have a child together and are in a relationship of some permanence, or 3) are married, you gain certain automatic rights in Ontario primarily pursuant to the Family Law Act (FLA). A domestic contract (also known as a Cohabitation Agreement or Marriage Contract) permits these automatic rights to be varied in order to better suit the intentions of the partners. There are a number of questions that can be answered and agreed upon through a domestic contract that may not be so stress-free and straightforward to answer in the event of a separation.

What Impact Will Our Relationship Have on Our Property Rights?

One of the main questions asked and argued about when partners decide to part ways is, “Who gets what?” Unmarried partners do not have automatic rights concerning property and therefore ownership is determined solely by who is named on an asset. For example, if your partner is the only individual named as the owner of the house that you are both living in, then you will not have any default rights to an interest in the value of the house, nor will you have a right to stay in the house in the unfortunate event that you separate. If you had been contributing to the house, it is possible to establish an interest in the property through an equitable claim in court. However, there are numerous legal thresholds to exceed in order to establish such an interest and the results of these types of claims are unpredictable. A domestic contract allows you and your partner to be clear as to who owns what, how assets will be distributed, and the permitted living arrangements in the event of a separation.

It is also important to note that, if you become married without a domestic contract in place, there are certain property rights that you and your partner immediately acquire. While the details of these rights are beyond the scope of this article, the general impact is that 1) the value of most assets acquired by either partner during the marriage essentially become a part of the marriage and 2) the value of the “matrimonial home” becomes a part of the marriage, regardless of who owns it or when it was obtained. What is critical to understand here is that this means there is an obligation to split the value of the home that you live in with your partner, regardless of who owns the property or for how long they have owned it (even if it was owned prior to the marriage). A domestic contract remains enforceable in the event that you get married (and can also be entered into in the event that you are already married) and allows you to vary these automatic property rights in order to reflect your intentions with regard to your assets.

Do Either of Us Expect Financial Support From the Other?

If cohabiting or married partners separate, the partner with the lesser income may be eligible for spousal support payments pursuant to the Family Law Act. Unfortunately, the framework for determining whether spousal support payments will be ordered by a court is unclear and is very case-specific. In order to avoid unexpected surprises and expensive litigation, a domestic contract can contemplate whether spousal support will be payable in the event of a separation and if so, how much will be payable and for how long. While it is possible for a court to determine that the spousal support provisions of a domestic contract are unconscionable and therefore unenforceable, the fact that the partners have come to an agreement with regard to the matter will be a major factor considered by a court. 

If We Have Children, How Are We Going to Raise Them?

The Family Law Act also permits partners to agree upon the education and moral training of their children as well as each partner’s support obligations for the children through a domestic contract. This allows partners to come to a greater understanding of each other’s values, beliefs, and intentions with regard to the upbringing of children ahead of the final hour. Note that partners are not permitted to determine the decision-making responsibility or parenting time with respect to their children within a domestic contract (this is only permitted to be contemplated in writing in the event of a separation). 

Preparing a Cohabitation Agreement

Overall, a domestic contract allows you to outline the obligations and rights of each partner during their time living together. It also allows for you to determine how matters can be settled between you and your partner in the unfortunate event that the relationship comes to an end.

If you are considering entering into a domestic contract, it is strongly recommended that you consult with a family lawyer in order to ensure that the agreement is enforceable and accurately reflects your intentions (see the article here on the enforceability of domestic contracts: Domestic Contracts – The Importance of Accurate Financial Disclosure and Legal Advice).

If you have any questions about the impact that your relationship will have on your future rights and obligations or about the draft and execution of a domestic contract, please contact our family lawyer, Jason Lane, at jason@durhamlawyer.ca, or you can call 289-220-3241 for assistance.

“This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see or speak to a lawyer. Each case is unique, and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.”