Family Law... The Romance of a Cohabitation Agreement

Tuesday, September 29th, 2015
Posted in: Cohabitation Agreements and Marriage Contracts Family Law by Laura Kanaan , Associate

Laura Kanaan – September 2015

It is increasingly common for partners to live together without marrying.  In Nova Scotia, there is NO legislation that provides rules for the sharing of assets and debts upon the breakdown of a common-law relationship.  As a result, many people to have misconceptions about their legal entitlement at the end of a common-law relationship.  These misconceptions can create expectations that result in partners making financial decisions about their lives in a manner that is inconsistent the law.

The most common misconception facing common-law couples is with property entitlement. Many partners believe that their common-law relationship creates an automatic entitlement to share in the property owned solely by the other spouse, such as their partner’s home or pension.  They contribute to their partner’s property, or pay off their partner’s debts, with the expectation that they will eventually share in their partner’s property. This is not the case as the law does not provide an automatic division of property.

Conversely, some partners believe that if they maintain assets in their own name, those assets will never be shared with their partner.  This is also not accurate as it is possible for common-law relationships to give rise to entitlements to the other spouse’s property based on each partner’s contributions to the relationship.

Property division for common-law couples is complicated. Without legislation and rules, the cases are often determined on a case by case basis making it difficult to predict the outcome. The legal starting point is that each partner will keep the assets and debts held in their own name.  The only assets the law will presume should be divided jointly are assets held in joint names.  However, it is possible for partners to make a claim against the property of the other (or to divide jointly held property unequally), based on their contributions to the relationship. In these cases, partners base their claim on equitable remedies, such as unjust enrichment.  If they are successful in their claim, they may be awarded a share of their partner’s property, regardless of ownership.

The Supreme Court of Canada has provided some guidance as to what factors they examine when assessing whether a partner is entitled to share in the property of the other spouse. This is sometimes framed as whether the parties were engaged in a joint family venture, which could result in a sharing of property. There is no exhaustive list of what might constitute a joint family venture, but some indicators of whether they were (or were not) could be:

Litigating these issues can be complex and costly with the results leading to disappointment and financial hardship for one or both partners.  We recommend partners discuss these issues throughout their relationship, and set out their expectations in an agreement. This allows both partners to arrange their finances and plan for their future accordingly. It also cuts down on litigation and acrimony should the relationship end.

Such agreements are often referred to as Cohabitation Agreements. They can address things such as:

Cohabitation Agreements should strongly be considered in any of the following scenarios:

Discussing these issues with your partner at the start of your common-law relationship will help ensure peace of mind for both of you in the future.

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