A Cohabitation Agreement is essentially an agreement between parties who share costs associated with human needs like food and shelter. It might be between friends who want to live together, or, as is most common, partners who want to live together.
For those who are partners, a cohabitation agreement will often deal with more than basic human needs while in a relationship of shared expenses. For example, the agreement may spell out who pays for what, how each partner will or will not contribute to the expenses of the other’s children, how title to property will be held, and how money and property will be divided in the event that the relationship ends.
It is common for cohabitation agreements of partners to include a provision that upon their marriage, the agreement will prevail as a Marriage Contract.
The benefit of a Cohabitation Agreement is that it can help couples outline their legal rights and obligations while in a relationship, and if necessary, after the relationship ends. This is especially helpful for those who are common-law partners as New Brunswick’s law may impose support obligations and/or a division of property that is somewhat similar to, but not the same as, those who are married.
When does a relationship become “common-law”? This depends on the purpose of the relationship, and the legislation of the province in which the parties reside.
New Brunswick’s Family Services Act confirms that common-law partners are those who are unmarried and either:
- live together for a minimum of 3 years with one depending on the other for support; or
- live together for one year in which they have a child together.
If you are in a common-law relationship, s. 112 of the Family Services Act confirms that you may be obligated to provide spousal support, or entitled to receive it, if you apply for the support within one year of separation.
For example, assume Dick and Jane aren’t married and don’t have children. They have been living together and sharing expenses for 8 years. Dick has always made $150,000 per year, which is added to their joint bank account and used to cover costs of living for both parties, and Jane has always made $20,000.00 per year, which is also added to their shared bank account for costs of living. They live comfortably and vacation often.
Dick and Jane are in a common-law relationship in which Jane is largely dependent on Dick financially. If they separate, Jane may be legally entitled to spousal support from Dick for the years they shared together.
The law does not divide marital property for common-law couples as it does for married couples. If you’re married, you’re presumptively entitled to half of the marital property.
If you’re in a common law relationship, like Dick and Jane, property is generally divided based on whose name it is in. If Dick’s name is on the deed for the house, Dick is presumptively entitled to the house. However, if Jane contributed through finances, labour, or time to develop or maintain it, she may be entitled to a share of the equity based on the extent of her contribution.
This is where a Cohabitation Agreement would be beneficial.
Dick and Jane can establish an agreement at any point in their relationship outlining the rights and obligations of each party while they are together, and if necessary, after the breakdown of their relationship.
Examples of what may be in a Cohabitation Agreement include:
- The expenses of food and shelter that each party will cover;
- The agreement to (or not to) invest in each other’s children;
- Each parties’ entitlement to RRSPs or pension plans of the other;
- How belongings would be divided upon breakdown of the relationship;
- Support payments that will be provided upon breakdown of the relationship; and
- Each parties’ entitlement to property upon breakdown of the relationship.
These are only a few examples of what may be covered in a Cohabitation Agreement. It is the parties’ choice as to what else is included.
If you would like to learn more about Cohabitation Agreements and/or common-law relationships, please contact us.
Remy Rosinski, Student-at-Law