Is Independent Legal Advice Required for a Property Agreement?

Someone has put a property agreement in front of you. It might be a separation agreement after a breakup, or a marriage contract or cohabitation agreement before or during a relationship. You are probably wondering whether you must see a lawyer first, and whether the agreement will still hold if you do not.

This article explains how these agreements generally work in Ontario, what the formal signing steps are, and when a court can set an agreement aside. It is general information, not advice on your document. If you are being asked to sign something that decides who keeps the home, a lawyer can review it before you commit.

What a property agreement does

Without an agreement, the default rules apply. For married spouses, property acquired during the marriage is generally split equally when the marriage ends, and the spouse with the smaller share is owed an equalization payment. Common-law partners are not legally required to split property acquired while living together, although a partner who contributed to property the other owns may have a right to part of it.

A domestic contract lets spouses vary those defaults. Ontario names a cohabitation agreement and a separation agreement as examples. That is why these documents matter so much: signing one can replace the rules that would otherwise protect you.

Is legal advice mandatory?

The signing steps Ontario describes for a marriage contract or cohabitation agreement are that both parties sign in front of a witness and the witness signs too. Getting legal advice is not one of those listed steps. Whether the rules for a separation agreement differ in any detail is worth confirming with a lawyer.

That does not make advice unimportant. A court can set an agreement aside if a party did not understand it or if significant assets or debts were not disclosed. Legal advice is a practical way to protect yourself on those points.

When a court can set an agreement aside

Under the Family Law Act, a court may, on application, set aside a domestic contract or a provision in it in three 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.
• Otherwise in accordance with the law of contract.

These are exactly the problems that a lawyer's review and a full exchange of financial information are meant to prevent. Setting an agreement aside is a court application, not something you can simply declare yourself.

In one Court of Appeal case, the contract said each party had received independent legal advice, yet neither had consulted a lawyer. The court did not decide whether the lack of advice or disclosure was proven, because those were one spouse's allegations. The lesson is practical: a recital in the document is one thing, and what actually happened is another. If the statement is not true, do not sign it.

Does time run out on challenging an agreement?

The Family Law Act sets no limitation period for an application to set aside a domestic contract under section 56(4). In the same case, the majority held the declaration has no limitation period, but any follow-on relief keeps its own period. For an equalization claim, that is six years under section 7(3)(b). One judge agreed with the result but disagreed with the broad statement.

For married spouses, the general deadline for property claims is six years from separation or two years from the day the divorce is final, whichever comes first. Because the interaction between these deadlines can be technical, do not rely on waiting. If you have doubts about an agreement you already signed, speak to a lawyer soon.

What to do before you sign

• Ask for the full draft in writing and take time to read it; do not sign under pressure.
• Ask for complete financial disclosure: assets, debts and anything else that affects the numbers.
• List what you would be giving up compared with the default rules, such as an equalization payment or a share of the home.
• Meet a family lawyer of your own, separate from your spouse's lawyer, to explain the agreement in plain terms.
• Make sure any statement in the agreement about legal advice or disclosure is true before you sign.
• Keep a complete signed copy, and confirm with a lawyer what signing and witnessing steps apply to your type of agreement.

If cost is a concern, Family Law Information Centres in family courts across Ontario give information on separation and divorce, alternative dispute resolution and local resources.

Frequently asked questions