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Family Law Blog

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Living together, common-law relationships and cohabitation agreements

by Anita Phillips

As a parent of three children in their 20s, I know that it’s not unusual for people in their demographic to move in or buy property with their partners. Having had many discussions on this topic with my daughters and their friends, I can safely say there is a lot of misinformation around what it means to be a common-law couple.

In this column, I will clarify some common misconceptions and explain how the law applies to common-law relationships and how a cohabitation agreement can help provide some protection and stability to what may be a temporary arrangement or the start of a lifetime together.

Are you in a common-law relationship?

Younger couples often wonder at what point they are considered to be living in a common-law relationship. Like everything in law, the answer depends on the context.

For example, in the context of employment benefits, you are regarded as a common-law couple if you have lived together for one year. Similarly, for Ontario and federal government purposes relating to tax credits, benefits and income tax, you are typically considered common-law if you have lived together for one year — or, if you have lived together for less time but have a child, or adopted a child, together.

For family law purposes, partners are recognized as common law if they have lived together for three years or have a child, or adopted a child, together.

What does it mean to be a common-law couple in family law?

When a couple lives together for three years or more or has a child together, legal rights and obligations relating to spousal support arise as a result of their common-law relationship.

If a common-law couple breaks up, each partner could have the right to claim spousal support from the other. If one person earns more than their spouse, they could end up paying spousal support to their ex.

To illustrate the situations common-law couples often find themselves in, I will use the example of Eric and Jasmin, a couple who are both in their late 20s. They dated in university and moved in together after graduation. They have lived together for five years. Eric has always made more money than Jasmin and now makes about twice what she earns.

Jasmin is entitled to claim spousal support from Eric. The Spousal Support Advisory Guidelines set out a range of the amount that would be reasonable for Eric to pay and a range for how long Eric should pay spousal support. Because they are a younger couple without children, Eric will likely need to pay support for between half the length of the time they lived together up to the full length of their cohabitation.

If Eric and Jasmin had talked to family lawyers when they decided to move in together, they would have learned about their spousal support rights and obligations and could have decided for themselves what they felt was fair for their relationship. They could have agreed in a cohabitation agreement what spousal support, if any, would be payable if they separated after living together for a few years.

How do common-law couples divide their property if they separate?

There are detailed rules for how the value of property is shared and divided when a married couple separates, but these rules do not apply to partners in common-law relationships.

For unmarried couples, ownership of the property usually determines who keeps it. Basically, what I own is mine, what you own is yours and if we own something together, we are each entitled to half. Sometimes that’s fair, but often it isn’t.

Using the example of Eric and Jasmin again, I’ll demonstrate how things may not work out fairly and how a cohabitation agreement could help.

Let’s suppose that Eric and Jasmin bought a condo and lived there until they broke up. They hold title to the condo as joint tenants. Eric had more money than Jasmin, so he contributed 70 per cent of the down payment and condo expenses, and Jasmin put in 30 per cent.

Eric and Jasmin need to sell their condo and Eric feels he should be entitled to a larger share of the proceeds of the sale because he contributed more than Jasmin, both in purchase costs and mortgage payments. Unfortunately for Eric, the way he and Jasmin own their condo is significant. Because Eric and Jasmin own the condo jointly, each of them is entitled to 50 per cent of the value of the property. The fact that Eric financed most costs associated with the home does not entitle him to a greater share of its value.

Had Eric and Jasmin received advice from a family lawyer before buying the condo, they might have agreed to hold title as tenants-in-common, rather than as joint tenants, which would allow them to specify their share of ownership of the condo, based on their individual contributions to the purchase price, and expected contributions towards the mortgage payments. Better yet, they could have signed a cohabitation agreement detailing how they would share expenses related to the condo and how they would divide the condo’s value in the event they separated.

Exceptions to the rule of ownership for common-law couples

Like a lot of things in family law, there are exceptions to every rule, and there is a big one for how common-law couples divide their property after they separate.

If determining ownership strictly by who is on title to the property is unfair to either spouse, they have the right to claim an ownership interest in their partner’s property.

Using Eric and Jasmin again to illustrate, if Eric owned the condo on his own before Jasmin moved in and held title in his name alone, would he be entitled to keep all the value in the condo? Not necessarily.

When they broke up, Jasmin might be able to claim that she was entitled to a share of the value of the condo, because of contributions she made to the condo, which Eric benefitted from. These contributions might be, for example, some of the following:

  • Direct payments towards housing expenses, like condo fees or mortgage payments; 
  • Payments into a bank account where housing expenses were paid from; 
  • Work Jasmin put into the condo, such as home improvement projects and repairs.

The law calls Eric’s benefit from Jasmin’s contributions to the condo “unjust enrichment,” and unjust enrichment claims are not unusual when a common-law couple separates. If successful, Jasmin would be entitled to part of the value of Eric’s condo, even though he owned it in his name alone. Unjust enrichment claims can apply to all kinds of property including RRSPs, pensions and independent businesses, not just real estate.

Cohabitation agreements give common-law couples peace of mind

A cohabitation agreement could have provided protection for both Eric and Jasmin in terms of their property and financial interests. The agreement could also give the couple certainty around what would happen if they separated. 

Something I tell people almost every day is that the law applies to you — whether you want it to or not, and whether it makes sense in your relationship or not. If you are thinking of living together as a couple, find out what the law says about your rights and obligations as a common-law couple. If there is anything that doesn’t sound fair to you, or you don’t think fits your relationship, talk to your partner about what you feel would be right for you and then speak with a family lawyer about a cohabitation agreement.

Cohabitation agreements are drafted according to what both partners agree to be fair for their relationship. As the relationship changes, they can be revised to reflect what the couple determines is right for them. Without an agreement, they may have to live with rules imposed on them by legislators or the courts, which might be very unfair to their situation.

Schedule a consultation with us

If you or someone you know is thinking of taking the next big step of moving in with a boyfriend or girlfriend or buying property together, give us a call at Morgan and Phillips. We will help you understand the legal implications so you can determine what is right for you and your partner.

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by Anita Phillips

Anita Phillips has extensive experience as a family and estate law lawyer. She has particular expertise in negotiating and drafting domestic contracts and in developing estate plans for clients with blended families and for business owners.