Cohabitation Agreement When Buying a Home Together in Ontario

You and your partner are not married and you are buying a home together. Perhaps one of you is putting in a bigger down payment, or one earns more and will carry more of the mortgage. The question is how to protect each person's share if the relationship ends.

This article walks through how a cohabitation agreement and the way you hold title work together. It is general information only, and a lawyer can confirm how it applies to your purchase.

Why unmarried buyers need to plan

Ontario does not divide property between common-law couples when they separate. Each partner keeps the property they bought, and neither has a right to share in the other's increase in value. Under the Family Law Act, the property division and matrimonial home rules use a meaning of "spouse" that covers married people only.

That does not mean a co-owner has no rights. 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 back the contribution, the partner may have to go to court. A written agreement can replace that uncertainty with terms you chose.

Recording unequal down payments

Two unmarried people who are cohabiting, or intend to, may make an agreement about their rights and obligations, including property and support. That gives you room to say what happens to unequal contributions. Questions to settle include:

• How much each of you is paying toward the down payment, and where the money came from, such as savings, a gift or an inheritance.
• Whether the larger contributor gets their money back first if the home is sold, or only a larger percentage of the proceeds.
• How mortgage payments, property taxes, insurance and repairs are shared, and whether extra payments by one person change the split.
• Who pays for major renovations and how they are credited.
• Whether either of you may buy the other out, and how the home would be valued.

There is no single right answer. The best terms depend on your incomes, your plans and how much risk each of you is comfortable with.

Title: joint tenancy or tenancy in common

How you hold title is separate from your agreement, but the two should match. Joint tenancy is co-ownership with a right of survivorship. Under a tenancy in common, each owner holds an undivided interest that does not end on their death, so there is no right of survivorship.

If you want unequal shares to be reflected, your lawyer can explain how title and the agreement should be drafted together. Be aware that a charge registered by fewer than all joint tenants does not automatically sever the joint tenancy, and whether the owners intended to sever is a factual question for the courts.

A common-law spouse also does not inherit under the Succession Law Reform Act if there is no will. That is another reason to think about title and a will together.

Debts and joint accounts

No matter what your agreement says, lenders look to the credit contract you signed. Whether you are responsible for a debt usually depends on whether you are a co-borrower or guarantor, so read the mortgage documents carefully. Joint bank account holders share responsibility for all transactions, and an overdraft may create a debt for everyone on the account.

Your agreement can say how you will split costs between yourselves, but it generally does not change what you owe a lender.

Signing it properly and next steps

A cohabitation agreement is unenforceable unless it is in writing, signed by the parties and witnessed. Ontario's guidance says each partner should speak to a different lawyer and that you should exchange financial information before signing. If you later marry each other, the agreement is deemed to be a marriage contract.

• Write down each person's down payment and its source.
• Collect statements for savings, debts and income, and share them with your partner.
• Decide how title will be held and what happens to the home if you separate.
• Each speak to a separate lawyer before signing.
• Sign with a witness, then keep a copy each with your closing documents.
• Review your wills once the purchase closes.

Frequently asked questions