What is a separation agreement?

A separation agreement is a written document that formalizes and, in many cases, finalizes the separation between two parties who were cohabiting in a relationship. A previous blog post already examined the significance of the separation date. Typically, parties will first separate and then they will do their separation agreement after the physical separation. A separation agreement is described in the Family Law Act at section 54 as follows:

54 Two persons who cohabited and are living separate and apart may enter into an agreement in which they agree on their respective rights and obligations, including,

(a) ownership in or division of property;

(b) support obligations;

(c) the right to direct the education and moral training of their children;

(d) the right to decision-making responsibility or parenting time with respect to their children; and

(e) any other matter in the settlement of their affairs.

In other words, the rights and obligations of a separating couple can be written in a separation agreement, except for illegal clauses.

There are some instances where a separation agreement or a provision therein can be set aside using a combination of both the Family Law Act as well as the common law. Sections 33(4) and 56 of the Family Law Act are the primary legislative grounds by which a separation agreement can be set aside in Ontario. This is a high threshold to meet, as courts typically want to respect the agreements spouses made unless there is some significant exception to consider. This will be covered in a separate post.

The significance of separation agreements can be found in the banking industry. One mortgage blog post says, “[b]ut even if you sell your house and want to buy another, you have to get a signed separation agreement before you can even think about getting another mortgage.”

In other words, a bank will want to see the terms of your separation agreement before giving you money to buy another home or before refinancing the existing home. This is not surprising given that the separation agreement with likely dictate what property you own, but it will also dictate any payments you are to receive or to give via equalization, spousal and/or child support. Thus, in order to assess the income of the parties for things like mortgage financing, the separation agreement will inform the bank on such.

Section 55(1) of the Family Law Act describes how parties should execute their separation agreement:

A domestic contract and an agreement to amend or rescind a domestic contract are unenforceable unless made in writing, signed by the parties and witnessed.

However, the Court of Appeal suggests in Gallacher v Friesen, 2014 ONCA 399 that in certain circumstances these requirements can be relaxed:

27 Justice Pepall's decision in Virc v. Blair is consistent with a substantial body of case law in Ontario, and in other provinces with similar legislation, holding that the strict requirements of s. 55(1) may be relaxed where the court is satisfied that the contract was in fact executed by the parties, where the terms are reasonable and where there was no oppression or unfairness in the circumstances surrounding the negotiation and execution of the contract

After parties execute a separation agreement, they can file it with the court if they wish. Section 35 of the Family Law Act is an important provision in this regard:

35 (1) A person who is a party to a domestic contract may file the contract with the clerk of the Ontario Court of Justice or of the Family Court of the Superior Court of Justice together with the person’s affidavit stating that the contract is in effect and has not been set aside or varied by a court or agreement.

…

(2) A provision for support or maintenance contained in a contract that is filed in this manner,

(a) may be enforced;

(b) may be varied under section 37;

(c) except in the case of a provision for the support of a child, may be increased under section 38; and

(d) in the case of a provision for the support of a child, may be recalculated under section 39.1,

as if it were an order of the court where it is filed.

In other words, you can file the separation agreement to have it enforced.

A separation agreement is not the only way to finalize a separation, however it is likely the preferable method. The alternative is going to court without an agreement, through expensive litigation, to try and finalize matters.

Obvious takeaways? A separation agreement is an important document that can finalize and set out the rights and obligations of a separated couple. Proper separation agreements are typically enforceable by the court, although sometimes they can be set aside. These agreements are typically necessary for banks to obtain things like financing for a new home after separation.