Why you Need a Co-habitation Agreement
We have posted a number of blog articles already on the topic of property rights between common-law couples. As a prime example, when does a common law spouse acquire an interest or claim against property (often a home) of the other spouse.
The catch phrase in justifying these claims is the court finding a joint venture between the common-law spouses. This is largely fact driven and in this humble author’s opinion, is an expression of what is “fair” dressed up in expensive judicial language. The results of such a claim are never certain and the authors of the relatively mathematical formula for married couples found in the Family Law Act, are not happy with this relatively new torturous process.
In the recent Superior Court decision in Reiter v Hollub, Justice Polack decided such an application. The common-law couple had lived together for six years. The house always was in the common-law husband’s name, but increased by over $400,000.00 during the time the parties lived together. The common-law wife paid $400.00 per month, plus some other contributions towards the household expenses. She made a single $5,000.00 payment towards the mortgage.
The parties shared responsibilities for the household, but largely otherwise kept their financial lives separate and apart. After what was no doubt a significant investment in legal fees (I would not be surprised if the two parties together spent the better part of $100,000.00 to get to the point where a judge’s decision was received), the court found, sorry, we do not believe that there is a joint venture, there was no economic integration and the common-law wife never met the threshold. Looked at from afar by the average person on the street, she simply did not do enough, did not pay enough and the parties did not jointly act together enough for there to be a finding that she had been treated unfairly by not getting an interest in the common-law husband’s home.
When starting such a file, these facts are never that simple or straight forward and the importance of a cohabitation agreement screams loudly. Assuming such a cohabitation agreement would have cost the common-law husband $3,500.00 at the outset, he could have saved himself a great deal of emotional and financial misery. If his common-law spouse was not prepared to sign an agreement safeguarding his sole interest in the home, then he would have received at the beginning, rather than the end of their relationship, a clear signal that this just is not going to work.
Not only could the domestic contract have protected the common-law husband’s interest in the home, but it could have answered at the beginning, rather than at the end of the relationship, what common-law spousal support obligations were being incurred between the parties.
Dale Streiman Law LLP understands that spending thousands of dollars at the beginning of a relationship the everyone believes will last forever and simply cannot fail, is a hard pill to swallow, but life happens. Generally 50% of all relationships end unhappily and to act otherwise is to roll the dice which are generally tilted in favour of the house.