what is a cohabitation agreement

What Is A Cohabitation Agreement (And When Do You Need One)?

Have you recently moved in with your significant other or are you planning to do so?

If so, you’re entering a high-stakes game.

Like in most high-stakes games, things could go your way. If that happens, the payoff could be huge. You could, as they say, live happily ever after.

But if things don’t go well, that’s when things could start to get messy.

I asked my colleague and family lawyer: Laurence Klass from Watson Goepel to shed help shed some light on Cohabitation Agreements. The rest of this article is what he had to say.

Breakups are never pleasant, and unfortunately, that’s when disputes can get nasty. Most people don’t think that it will ever get to that point with someone they love, but sadly, breakups are when they see an entirely new side to the person.

I’ve seen this happen plenty of time. Two people, let’s say both of them divorced and with kids, fall in love and move in together. After while the relationship starts to fall apart.

Each of them brought different things they shared…but now the question of who brought what isn’t quite as clear. And as things start to unravel, the issues begin to emerge…

  • Who keeps the dog?
  • What are our kids entitled to?
  • What do we do with the property we bought during the time we were together?

Typically, answering these questions is tough, and become the centre of a legal dispute.

Other times, when people have the foresight (and good advice from a lawyer), they get a cohabitation agreement, making separations much easier.

What Is A Cohabitation Agreement?

Much like a marriage agreement or a prenup, a cohabitation agreement is a legally binding contract signed by two people who live together or are planning to move into the same home.
Cohabs, as these agreement are sometimes called, outline how things will be divided if the relationship were to end.

This includes who:

  • retains ownership of property purchased together
  • retains ownership of property acquired before the relationship started
  • takes responsibility of any debt accrued before or during the relationship
  • pays for household expenses; and
  • how inheritance would be divided if families are being combined

In British Columbia, as long as the terms are deemed fair and don’t infringe on anyone’s individual freedoms (like, for example, specifies who a person can or can’t talk to), these cohabitation agreements can be pretty wide-ranging.

Do I Need A Cohabitation Agreement?

Yes having one makes sense. If you are getting married or plan to, your cohab agreement can be worded in a way to ensure that it will still remain in force once you are married.

It also gives you a chance to come to an agreement of how things will get divided while you are still in the relationship (and in good terms with your partner).

cohabitation agreements are binding contracts

Cohabs reduce some of the stress during breakups and helps avoid the costs involved with disputes. They also help make sure that both parties take care of their families, and protect the inheritance that they give or receive to their own family members.

By having a cohab, you are resolving in advance what’s going to happen to the property if the relationship breaks down. Everything is much quicker, cost effective, and less stress.

In short, you can move on quicker with your life.

What Happens If You Don’t Have One?

In BC, if a couple doesn’t have a cohabitation agreement and a dispute ensues after their relationship breaks down, the decision as to who gets what will be governed by the Family Law Act.

According to this act, property and debt is divided equally among both parties. It becomes the responsibility of each person to provide evidence proving who brought what into the relationship, which is sometimes difficult to do.

The time to have these agreements made is when people are on good terms. If you wait and the couple isn’t on good terms, lawyers get involved, and that can get pricey and could take years.

Do You Need One If You Are Married?

Under British Columbian law, cohabitation agreements hold the same power as marriage agreements (in fact, they are the exact same thing, except named differently).

These agreements apply to anyone in a married couple, a common law relationship, or who are living together. They can even include clauses that say that they remain valid if the status of the relationships transition from cohabitation to common law to marriage.

What Do You Need to Include in a Cohabitation Agreement?

Here is a list of things that can be included in a cohabitation agreement:

  • How family property, like real estate, possessions, and pensions, will be divided
  • How debt will be divided

The agreement can also determine who gets what if the relationship were to end. This includes:

  • who owns what
  • how much money each person puts in to run the household
  • how credit cards are dealt with
  • whether someone will receive spousal support upon an eventual breakup
  • how any disagreements will be solved

What Is Not Included?

In BC, certain things cannot be included in a cohabitation agreement.

These include:

  • Laying out how people must act within the relationship
  • Stating parenting responsibilities for children who have not been born.
  • Laying out future child support for any unborn children.

Do You Need to Update Cohabitation Agreements?

Cohabitation agreements should be seen as a living document. They need to be reviewed at regular intervals to keep them current and make sure they still do what they are meant to.

We recommend that people update their cohabitation agreement every five years, or whenever a significant event, such as a marriage or the birth of a child, occurs. Additionally, if one of the members of the agreement were to suddenly receive a large sum of money or a property in an inheritance, for instance, the agreement should also be reviewed.

If you would like to make sure that this update occurs at a regular interval, you can include a review clause in the document itself. This clause would be triggered after an event (such as the ones mentioned above) or could state that the agreement needs to be reviewed every couple of years to remain valid.

Whatever you choose to do, the main point is that it’s important to look at the agreement regularly to make sure it continues to work for both parties and to make sure that it hasn’t become significantly unfair.

whats included in a cohabitation agreement

How Do You Get a Cohabitation Agreement?

There is a growing trend of people who choose to try to save money by using resources online to create their own cohabitation agreements.

Bad idea.

While an online template gives the appearance of saving time and money, this is just not true.

There are plenty of precedents of people who have entrusted their property and debt to these online templates, only to find out that they hold no legal value, causing their assets to be divided according to the Family Law Act.

If you want your cohabitation agreement to stand up in court, you need a family lawyer who can tailor it to fit your specific needs. Both parties should also consult independent legal counsel to make sure the agreement is fair and gives adequate coverage to their own interests.

If you have any more questions about Cohabitation or Marriage Agreements, let me know and I’ll put you in touch with a family law lawyer who can assist.

A big thanks to Lawrence Klass for this great information!

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When Do You Need to Hire a Notary?​​​​​​​

A notary public (also known as a notary), is a trained professional who can provide limited legal services to the public.

Notaries have been around for a long time. Babylonian notaries chiselled the oldest written law into stone over 4000 years ago. At that time, notaries were wise and trusted members of society. Their role was to oversee transactions and guarantee their fairness.

The role has since evolved into a professional service, but its essence is still the same. Notaries still guarantee the fairness and legality of transactions.

When Do You Need a Notary?

There are a number of scenarios in which you should consider hiring a notary. These include:

  • If you’re looking to buy or sell a house
  • If you’re looking to transfer a property to a family member
  • If you’re getting a mortgage
  • If you want to write a will, a representation agreement, or a power of attorney
  • If you or your spouse are planning on travelling with your children
  • If you need to sign an affidavit
  • If you’re moving to another country and need documents notarized

Many people think that they should hire a lawyer to do these things. I’ve written about the difference between lawyers and notaries in the past, but here’s what you need to know in a nutshell:

BC Notaries are experts in the areas we choose to practice.  

If we act for you in a residential real estate transaction, for example; our experience will help us to identify issues and deal with them before they become problems.

The Difference Between Lawyers and Notaries

If we do get to a place where litigation is necessary, we have a network of trusted referral partners and we will find a lawyer who’s an expert at litigation.  

What Can Bc Notaries Do for You?

BC Notaries have professional standards dictated by the Notaries Act of BC. They also are governed by the rules, by-laws and best practices dictated by The Society of Notaries Public of British Columbia.

That means that at David Watts Notary Public we are certified experts, and can help you with all your notary needs.

1. REAL ESTATE TRANSFERS

We help you complete you with Purchases, Sales, Mortgages and Family Transfers.

2. PERSONAL PLANNING DOCUMENTS

Prepare for the future with Wills, Powers of Attorney, and Representation Agreements.

3. NOTARIZATION

General Notarizations and Certified True Copies of Original Documents as well as Notarize your signature on:

  • Travel Letters
  • Affidavits
  • Statutory Declarations
  • Letters of Invitation
  • Passport Documents
  • Various Applications

4. INTERNATIONAL AUTHENTICATION AND LEGALIZATION SERVICES

Get Documents authenticated and legalized for use in Canada and around the world.

Get In Touch

To find out more including information about our processes and receiving a quote please call or email us.  We are happy to assist you directly or to provide a referral for someone who can help.

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2018 Winner of Georgia Straight’s – Best of Vancouver

Every year Vancourites vote in the Georgia Straight’s Best of Vancouver. Getting to the top is no easy feat – there are so many great businesses servicing the community!

This year we received first place as the “Best Notary”. Previously, our category was called:  “Best Lawyer/Notary When Buying/Selling Real Estate”. This is our ninth win!

A big thank you to all of our amazing clients and referral partners, we couldn’t do it without you.

We are fortunate to have an incredible team working behind the scenes to make the magic happen. Read on to find out what they love about their work and as they share their own Best of Vancouver.

David Watts, Notary Public

What I love about my work:

I love making a difference for people. Sometimes it’s the opportunity to go the extra mile and help people get their real estate transaction done despite challenging circumstances and tight timelines. This is where our office really shines and I’m always happy to hear from clients how one of our team has helped them or done some excellent work.

I also really like sitting down with people to help with their Wills. It’s a chance to get to know my clients and help provide comfort around recording their wishes with their planning documents. Wills Clients often say that the process was much easier than they expected and that they feel like a large burden has been lifted. I love it when people tell me how they feel after they’ve worked with us; it’s always very satisfying.

My favourite thing about Vancouver:

What I like most about Vancouver is the proximity to a variety of outdoor activities.  I love being outside. Vancouver has hiking opportunities, great beaches, golf courses, amazing skiing fairly close by at Whistler; trails around Burrard Inlet and False Creeks.  There so much to do; you can find something outside almost always.

It doesn’t hurt if you have good rain gear this time of year!

Clinton Lee, Notary Public

What I love about my work:

Being able to assist the community with legal services that allow them to move forward in life. Whether it’s allowing a minor to travel with a parent to another country through a notarized consent form or assisting first time home buyers in purchasing their first home, the reward comes with the satisfaction of knowing that each person was able to make a positive step in their life through our services.

My favourite thing about Vancouver:

The ability to obtain virtually any type of food you want. Vancouver holds some of the most amazing world cuisines and having it close by brings so many options and opportunities to always be trying something new.

Liana Zhou, Conveyancing Secretary

What I love about my work:

Helping clients to complete their real estate transactions and hearing back their excitement and a massive smile :).

I always feel happy and supported working with our team. When there’s a huge challenge, we are always here for each other and we fix the issues together.

I also love the degree of control and flexibility with my job. If needed, I am able to make perfect arrangements with our team to accommodate any circumstance.

My favourite thing about Vancouver:

The food! We have so much variety.

Besides trying out new foods, I love to walk my dog, Milo, in the parks, exploring new trials, and meeting new furry friends in my days off!

Hanlu (Lulu) Deng, Conveyancing Secretary

What I love about my work:

99% of the time, I bring good news to people – the emotional reward from clients makes me feel happy to work.

Our system is really well designed and I love to complete my work in an effective and efficient system – I get a sense of satisfaction regarding my everyday tasks.

I love our team. There’s no stress working together, everyone supports each other and we face problems as a team. Everyone is willing to help each other.

My favourite thing about Vancouver:

The top of Blackcomb Mountain during winter and Rivendell Retreat Centre in Bowen Island. I love to ski, hike, swim and eat with my family.

Adrienne Voute, Wills and Advance Planning Secretary

What I love about my work:

The legal profession offers people the opportunity to continually learn. I like working hard and developing a skill until I am good enough to help others benefit from it.

My favourite thing about Vancouver:

One place I really enjoyed this summer was the Steveston Country Farms. I went just before the beginning of fall and all the cute farm animals really put me in an autumn mood.  If you go, grab some of their fresh produce before winter comes and they close for the year.

Samantha Lee, Reception & Conveyancing Assistant

What I love about my work:

I love how everyone in our office works to the best of our abilities and genuinely care about the people we work with.

My favourite thing about Vancouver:

I love hiking our mountains and running our trails… give Golden Ears and Burnaby Lake a shot.

Thanks again!

We are grateful that we earned the appreciation of our clients, peers, and friends to win again this year.

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The Ultimate Guide To Buying Your First Home In Greater Vancouver

The Ultimate Guide To Buying Your First Home in Greater Vancouver

Are you getting ready to buy your first home?

While it’s a big task, when you are arm yourself with the right information, you can avoid setbacks that complicate the purchasing process.

Most of these items can easily be avoided if buyers have access to proper information. That’s why, if you’re looking to buy your first home in Vancouver or the surrounding area; here’s a guide to help you navigate through this complicated (and often daunting) process. 

Before you even start thinking about purchasing a home, there are a few things that you must consider.

Check Your Credit Score

The health of your credit score will dictate whether or not you can secure a loan, how much you can borrow and what interest rate you will get so it’s helpful to find out in advance where you are and what you can do to improve it.

Every lender has their own criteria, however, most consider a score of 650 and above low risk.

According to Mogo, your scores are calculated by:

  • 35% payment history – whether or not you make your payments on time.

  • 30% utilization ratio – they recommend staying before 35% of your total available credit and never going above 70%.

  • 15% length of credit – the longer you have accounts open, the more history it shows of you being responsible with credit.

  • 10% types of credit – have a mix of high risk credit such as credit cards and lines of credit, and low risk personal loans.

  • 10% inquiries – hard credit checks occur when you are applying for new credit, phones and even bank accounts. Too many can affect your credit rating.

Both Equifax and Transunion will give you a free report each year – go here for full instructions. Services such as Mogo and Credit Karma will give you free monthly updates without making formal credit checks that affect your scores.

Make sure to check your credit reports for any errors and look for ways you can improve your credit score by:

  • Paying your bills on time.
  • Paying your debts as quickly as possible.
  • Not going over the credit limit on your credit cards.
  • Reducing the number of credit applications you make.
  • Having healthy credit history.

credit score

Determine What You Can Afford

Given the high prices of real-estate in Vancouver and its surrounding areas, a downpayment for a house or a condo may be a significant amount of money.

You will be required to have at least 5% for a down payment to get a mortgage with default insurance; or at least 20% for a mortgage without default insurance.

You’ll also need to prove to your lender that you can cover your closing costs on top of your down payment.

Closing costs may include:

  • Mortgage Application Fees
  • Mortgage Insurance
  • Appraisal Fees
  • Survey Fees
  • Property Transfer Tax
  • Property Tax
  • GST
  • Legal Fees
  • Land Title Registration Fee
  • Title Insurance

For full details check out our article The First Homebuyer’s Guide to Closing Costs in Vancouver.

You should also factor in moving costs, home insurance and anything you might have to spend as soon as you move into your property.

mortgage budget

Find A Lender

There are a number of different ways to get a mortgage, the most popular being banks, credit unions, and mortgage brokers.

Each will have different terms, conditions, and interest rates.

Working with a mortgage broker will give you access to a wider range of mortgages and lenders than working with a solo lender such as your bank.  

Every mortgage broker will have relationships with different lenders, so ask them who they work with.

Mortgage brokers charge the lender a commission so you don’t have to pay any additional out of pocket fees with institutional mortgages.  There may be additional fees with private mortgages.

To make sure you find the right Mortgage broker, check out our guide on How to Choose the Right Mortgage Broker.

find a lender

Get Pre-approval On A Mortgage

Getting pre-approval doesn’t mean you are guaranteed to get a mortgage, or the amount that you’ve pre-approved for. It means the lender has assessed your financial situation and determined the maximum amount they will lend you and the interest rate they will apply.

Pre-approval allows you to begin looking at homes knowing your price range while understanding your mortgage payments.

Once you have found a home, the approved mortgage amount will depend on the value of the home and percentage of your down payment.

To get pre-approval you’ll need to provide:

  • Appropriate identification
  • Proof of employment or income
    • Your position within the organization.
    • Current salary or hourly rate.
    • Your employment length and history.
    • 2-3 years of your Notice of Assessment when self employed.
  • Proof you have the funds for a down payment.
  • What other assets you own.
  • Your debts and financial obligations including:
    • Credit card payments
    • Car payments
    • Lines of credit
    • Student loans
    • Child or spousal support payments
    • Any other debts

The lender will determine how much they are prepared to lend you based on your credit rating, income, and debts.

Understand Mortgage Penalties

Before signing on the dotted line for a mortgage, make sure that you understand all of the fees associated with your mortgage. One important fee to understand are the penalties you will have to pay if you decide to sell your home and prepay your mortgage.

For more information, check out our article What Are Mortgage Penalties? (And How to Avoid Paying Them)

mortgage penalties

Check to see if you qualify for the First Time Home Buyer’s Program

First time home buyers in British Columbia may qualify for the First Time Home Buyers’ Program.

This program is run by the provincial government, and reduces or eliminates the amount of property transfer tax you pay when you purchase your first home.

In B.C., the Property Transfer Tax (PTT) is a tax of 1% on the first $200,000 and 2% of the remaining value of the purchase price to $2,000,000.

This can add up to a significant amount of number, which means that you should definitely check to see if you can be exempt from paying this tax.

Find A Realtor

find a great real estate agent

You don’t NEED a real estate agent to buy a home, but you should consider getting one.

A real estate agent will be able to guide you through the process of searching for and purchasing a house. These professionals are knowledgeable about the market, and have helped close deals in the past. They will make your life easier throughout your purchase.

Because you will be working closely with your real estate agent, it is recommended that you hire someone you trust. Shop around, make some calls, and find someone who you’ll be comfortable working with. 

To make sure you find the right Real Estate Agent, check out our Guide How to Pick the Right Real Estate Agent.

Then, put them to work helping you find a house.

House Search

search for a house

Remember the pre-approval is the maximum your lender will MAY give you. It makes sense to look for properties below the maximum.

Once you have an agent working with you, your mortgage has been pre-approved, and you’ve figured out how much you can spend on a down payment, you’re ready to start looking for a house.

This next phase is complicated and time consuming, and requires you to do a number of things. Here are just a few:

Prioritize

Finding the right house takes time and effort, and a healthy amount of patience.

That’s why, if you’re serious about finding a home, you should place the search high on your list of priorities.

This will inevitably mean making some sacrifices.

You’ll probably be seeing many houses and going into many meetings, so keep that in mind when making plans.

Prioritizing the search also means avoiding large expenses (such as buying a car). Doing this will have an impact on your financial situation, and may mean that your mortgage pre-approval is revoked.

Be Open

Perhaps one of the most important things that first time buyers need to know is that they probably won’t be buying their dream home.

And that’s ok.

Being open to new plans and flexible about your wishes is key to successfully buying your first home.

Maybe the house you find is great but isn’t in the area you wanted. Maybe the location is ideal, but you need to invest in changing wallpaper and cupboards. Maybe the yard is a bit smaller than you wished.

The perfect home possibly doesn’t exist (or is out of your price range) and that is just a reality that everyone has to deal with. 

As long as you have an open mind about your first home, you’ll be fine. And remember: this home will probably not be your forever home, which means that you’ll most likely be able to upgrade down the road. 

Take A Close Look

When selling a home, people often bring in Stagers and do minor facelifts to make the house look its best. This can mean a room might look bigger than it is, or that you don’t notice something.

When you start seriously considering a property, make sure you measure rooms and look closely at what might be hiding behind a coat of paint.

Make An Offer

make an offer

Once you’ve found a home you like and made sure it fits your budget, it’s time to make an offer. 

Making an offer requires that you sit down with your real estate agent (and perhaps a notary public or lawyer) to draw up an offer that incorporates the right amount of “subjects”.

These “subjects” are conditions that protect your purchase. For instance, the offer can include a subject that specifies that unless a fix is made, the offer will be rendered void.

It should also include a subject to inspection condition. This will allow you to get a third party professional to check the house for any serious issues that the untrained eye would miss. Doing so can save you a lot of money in the long run.

If you are getting a mortgage, it should definitely include also include a subject to a financing condition. Your lender may have approved your for financing, but not like that building.  Make sure the lender approves the property as well as you.

If buying a house or detached property, I always recommend you make sure you can get insurance on that property.  Sometimes there are things like older aluminum wiring that can make it difficult. Your lender will require you have insurance before they advance funds; so make sure you can get insurance before you remove subjects are you are obligated to complete.

Get your finance approved

If the seller approves your offer, you must go back to your bank (or mortgage broker) and finish the loan approval process. As long as your financial situation has not changed since getting pre-approval, this should not be a difficult process.

Arrange an inspection

Once your financing has been approved, it’s time to do a final inspection.

This will cost around $500 (or more) and may take a while to do, so book it in as soon as you put your offer in.

Review Closing Costs

Inspection is just one of the many closing costs you’ll have to incur. 

Unfortunately, these costs will add up, and many people don’t know they exist. That’s why it’s important to review them beforehand.

In general, you should keep in mind that these costs could add up to nearly 4% of the final purchasing price.

For more information about Closing Costs, check out our Guide The First Time Homebuyer’s Guide to Real Estate Purchase Closing Costs In Vancouver.

Closing

real estate closing

At this point, you should know exactly how much money you’ll need for your BC Notary or Lawyer to complete the transaction. They will let you know what the best way to make this payment is, and will advise you on what you need to bring to the signing.

During this part of the process, you’ll have to go through a lot of paperwork. You’ll also potentially have to go back to the bank to make sure all mortgage details are finalized.

This part of the process may be tedious, but once it’s done, you’ll be the proud owner of your first home!

Next Steps

Now that you know the steps involved in purchasing a home, there are a few things you can do right now to get the ball rolling.

1. Find out how much you can borrow. Doing this will give you a clearer picture of how you’ll be able to pay for your new home.

2. Get advice from a BC Notary. Notaries provide professional legal guidance on the purchase or sale of a home and can help you navigate through the legal part of purchasing a home.

Want to know more? Get in touch now.

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[Infographic] The Ultimate Guide To Buying Your First Home in Greater Vancouver

We’ve created this handy infographic that covers the stages a first home buyer will need to go through to buy a house.

For a more detailed explanation, see this post.

If you find this infographic helpful, you can use it on your site. See below for full permission details.

The Ultimate Guide To Buying Your First Home In Greater Vancouver

 

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