Living together: Cohabitation agreement checklist

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Two people sitting on a couch reviewing paperwork at a coffee table with a laptop open in front of them.

Michael Callahan, CFP®, CIM®

Do you need a cohabitation agreement? And if so, what should it include? Before we answer those questions, let's first ask, what is a cohabitation agreement?

A cohabitation agreement is a legally binding document between two parties in a common-law relationship. The agreement typically outlines what each person is entitled to receive and obligated to do in the event of relationship breakdown. Note that a cohabitation agreement is like a prenuptial agreement (often called a 'prenup'), with a key difference being that a prenup is for couples entering into a marriage, whereas a cohabitation agreement is between unmarried, common-law couples.

Elements of a cohabitation agreement

Although the terms included in a cohabitation agreement can vary greatly from one couple to the next, some of the more common elements of a cohabitation include:

  • Rent or mortgage: If renting, should both names be on the lease, and who has rights to keep renting the unit after separating? If buying, who keeps the house, and who must move out?
  • Bills and expenses: Who is responsible for paying specific bills, utilities, memberships, etc.?
  • Pets: Who keeps any pets acquired either before or during the relationship?
  • Existing personal property: How will each person deal with any property previously owned and brought into the relationship, such as furniture or vehicles?
  • Property purchased together: How will jointly-owned property be separated, and who gets to keep specific pieces of property after separating?
  • Existing debt: How will each person deal with any outstanding debt previously incurred, such as credit cards or lines of credit?
  • Debts acquired together: Who assumes responsibility for jointly-acquired debt after separating?

Advantages of a cohabitation agreement

Disagreement is a common occurrence upon relationship breakdown – this can lead to a costly and time-consuming separation process. A properly-drafted cohabitation agreement could help save considerable time and money by distinguishing between joint and individual property and determining in advance how each partner’s finances and property will be managed in event of relationship breakdown. Creating the agreement can also help foster a healthy discussion about money and financial values. Given that money is cited as a leading cause of relationship breakdown, couples are generally well-advised to engage in meaningful discussion about finances when entering a common law relationship.

Bottom line

Personal circumstances can vary considerably, and a key benefit of a cohabitation agreement is that it can be tailored to fit the needs of each couple. Given that a cohabitation agreement is legally binding, it is important that the document be created with the assistance of a lawyer or other legal professional.