Cohabitation Agreement in Toronto: Condos, Renting and Property

In Toronto, a home or condo is often the biggest financial decision a couple makes, and one partner may put in far more than the other. Others rent for years and share costs without ever thinking about who owns what. Either way, being unmarried changes how the law treats your shared finances.

This article looks at how a cohabitation agreement can deal with the issues Toronto couples commonly face: who owns what, who pays, and what happens if you part ways. Whether any city-specific rules affect your situation is worth confirming with a lawyer; the focus here is applying the general framework to city life.

Why the default rules can surprise Toronto couples

Unmarried partners are not 'spouses' for the property equalization rules in Part I of the Family Law Act. Common-law couples are not legally required to split property acquired while living together, and they have no right to split the increase in value of property brought into the relationship.

When prices are high, that matters. If one partner buys a condo before the relationship and the other helps pay the carrying costs for years, the law does not automatically give the second partner a share of the rise in value. A partner who contributed to property the other owns may have a right to part of it, but may have to go to court to recover that contribution unless the partner agrees to pay. Unmarried partners can also claim unjust enrichment, and a joint family venture can lead to a share tied to contributions, though there is no presumption of one.

What a cohabitation agreement can cover

A cohabitation agreement may cover rights and obligations during cohabitation, on ceasing to cohabit, or on death, including ownership and division of property and support. For a Toronto couple, the practical topics often include:

• Whether a home or condo bought by one or both of you is shared, and in what proportions.
• How a down payment, mortgage payments or renovation money from each partner is treated if you separate.
• What happens to a place one of you owned before the relationship began.
• Who keeps or buys out the other if you separate.
• How support would work if the relationship ends.

The exact wording is what counts, so details such as how contributions are recorded or valued are worth working through with a lawyer. An agreement cannot decide decision-making responsibility or parenting time for children.

Owning together: title, death and mortgages

If you buy together, how you hold title matters. Land conveyed to two or more people is considered to be taken as tenants in common, not joint tenants, unless the document shows otherwise, even if one of them is the spouse of another. With joint tenancy, surviving co-owners inherit the deceased's share; with tenants in common, the deceased owner's share does not automatically go to the others but becomes part of their estate.

That choice interacts with your wills. An unmarried partner has no intestate share of an estate, so a co-owner's share could pass to someone else if title and wills are not coordinated. A cohabitation agreement can address what happens on death, and your title should match what you intend.

Mortgages add another layer. A joint borrower on a mortgage, loan or line of credit becomes equally responsible for repaying the unpaid balance. Registering a charge by fewer than all joint tenants does not automatically sever the joint tenancy. If you separate, being on the mortgage can remain an issue even after you stop living together, and lender release terms vary, so ask your lender early.

Renting and everyday finances

Many Toronto couples rent. Furniture and household items belong to the person who bought them. In a rental, an agreement can record who owns what, who pays which share of rent and utilities, and who keeps the appliances or furniture if you separate. The Family Law Act allows an agreement to deal with ownership and division of property and with rights during cohabitation.

If you are both on a lease, how your agreement fits with it depends on your situation, so it is worth confirming with a lawyer. A lawyer can review both documents together.

If you separate: buyouts, sales and land transfer tax

If co-owners cannot agree to sell or buy each other out, any person interested in the land may bring an action or application for partition, and the court may order a sale instead if that is more advantageous to the parties.

A buyout can also trigger Ontario land transfer tax. Transfers between spouses or former spouses are exempt in three cases: where the only consideration is assuming an encumbrance such as a mortgage, where the transfer complies with a written separation agreement in which the parties agreed to live apart, or where it is made under a court order. For this purpose, 'spouse' uses the Family Law Act s. 29 meaning. A buyout where one partner pays the other for their interest, beyond assuming the mortgage, does not fit the first category. Consideration also includes the assumption of liabilities, so taking over the mortgage counts toward value. Ask a lawyer how this applies before you sign anything. Toronto's own municipal land transfer tax was not covered here and should be checked separately.

Making the agreement hold up, and what to do next

An agreement is unenforceable unless it is in writing, signed and witnessed. Each partner should use a different lawyer and exchange financial information. A court may set aside a contract if a party failed to disclose significant assets or debts, or did not understand its consequences. In a city where one partner may hold substantial property or debt, full disclosure is especially important.

• Gather property records, mortgage statements, condo documents and lease copies.
• List what each of you put in toward a purchase, and any gifts or family help, since the right treatment depends on the facts.
• Decide how you want to hold title and update your wills to match.
• Each speak to your own lawyer before signing.
• Review the agreement when your housing or family situation changes.

Frequently asked questions