Are Cohabitation Agreements Legally Binding in Ontario?

You and your partner live together, or are about to, and you want to put your financial arrangements on paper. Before you rely on a cohabitation agreement, it makes sense to ask whether a court will actually honour it if the relationship ends.

In Ontario, a properly made cohabitation agreement is generally a real, enforceable contract. But it is not untouchable. This article explains what makes it binding, what can undo it, and which parts a court can look past.

Why couples sign a cohabitation agreement

Ontario does not divide property between common-law couples when they separate. Each partner generally keeps the property they bought, and neither has a right to share the other's increase in property value. Furniture and household items belong to the person who bought them. There is one exception: a common-law partner who contributed to property the other owns may have a right to part of it, and unless the owner agrees to pay the contribution back, the partner may have to go to court. The matrimonial home protections in the Family Law Act also do not cover unmarried partners.

A cohabitation agreement lets you set your own terms instead. Under section 53(1) of the Family Law Act, two unmarried people who are cohabiting, or who intend to cohabit, may make an agreement about their rights and obligations, including property and support.

What makes the agreement enforceable

The Family Law Act sets a basic formal test. A domestic contract, which includes a cohabitation agreement, is unenforceable unless it is in writing, signed by the parties and witnessed. A verbal deal, a text exchange or an unsigned draft will not meet that test.

• The agreement is in writing.
• Both partners have signed it.
• Their signatures were witnessed.
• Neither partner failed to disclose significant assets, debts or other liabilities that existed when it was made, since that can lead a court to set it aside.
• Each partner understood the nature and consequences of the agreement, since a lack of understanding can also lead a court to set it aside.

The last two points are not part of the formal test. They are grounds on which a court may set an agreement aside. Ontario's guidance also advises that each partner speak to a different lawyer and that the partners exchange financial information before signing. Those are recommended steps rather than legal requirements, but sharing financial information ties directly to the ground for challenge based on failure to disclose.

When a court can set an agreement aside

Even a signed and witnessed agreement can be challenged. Under section 56(4) of the Family Law Act, a court may set aside a domestic contract, or a provision in it, in these situations:

• A party failed to disclose significant assets, debts or other liabilities that existed when the contract was made.
• A party did not understand the nature or consequences of the contract.
• The contract can be set aside in accordance with the law of contract more generally.

This is why full and honest disclosure is so important. An agreement built on incomplete financial information is the easiest kind to attack.

Terms a court may not follow

Some subjects get extra scrutiny, even when the agreement is otherwise valid.

These extra rules sit alongside the general grounds above. A court may set aside a domestic contract or any provision in it for non-disclosure or lack of understanding, whatever the subject.

What to do next

If you are thinking about signing, or wondering whether an existing agreement will hold, a few practical steps help.

• Gather a full list of your assets, debts and income, and ask your partner to do the same.
• Do not sign until each of you has had a chance to read the draft and ask questions.
• Arrange for each partner to speak to their own lawyer.
• Sign in front of a witness and keep an original signed copy.
• If you later marry each other, remember the agreement is deemed to be a marriage contract.

If you already have an agreement and doubt it would be upheld, a lawyer can review how it was made and which terms are likely to matter.

Frequently asked questions