Living Together and Property Agreements
Learn what living together contracts are, who needs one, and what to include.
A contract is no more than an agreement to do (or not to do) something. Marriage is a contractual relationship, even though the “terms” of the contract are rarely stated explicitly, or even known by the marrying couple. Saying “I do” commits a couple to a well-established set of state laws and rules governing, among other things, the couple’s property rights should one spouse die or should the couple split up.
Unmarried couples, on the other hand, do not automatically agree to any state-imposed contractual agreement when they start a relationship. The couple may have a joint obligation to a landlord or to a mortgage company if they rent or buy a place together, but that obligation is no different than if they were roommates. Living together, in and of itself, does not create a contractual relationship, nor does it entitle you to a property settlement (or inheritance) should you split up (or should one of you die).
What's a Living Together Contract?
A typical unmarried couple buys property, mixes assets, and invests together, often without writing down how they intend to share the property if they split up. Then, if problems about money and property come up, they usually try to reach an understanding or a compromise. If they split up, they quietly divide their possessions and go their separate ways, and they are not required to follow the legal rules that apply to marriage and divorce.
But some couples’ relationships don’t end so well. They don’t quietly divide the property and move on, but instead bring their battle to court. Courts in most states have responded to these claims by trying to figure out what the couple had agreed to during the relationship and dividing their property accordingly. In doing so, courts have ruled that unmarried couples generally have the right to create whatever kind of living together contracts they want relating to financial and property concerns.
As a result, if an unmarried couple chooses to make an agreement together, or in some states if they act as though an agreement exists, that agreement will often be considered an enforceable contract—a “nonmarital agreement” in legal terms, or what we call a living together contract or agreement. Among other things, an agreement can help avoid problems when you commingle money and property; make clear what your intentions and expectations are regarding property ownership, caring for children, and covering household expenses; and ease the division of property during a breakup.
What to Include in a Living Together Contract
A living together contract can be comprehensive, covering every aspect of your relationship, or it can be specific, covering only one transaction (such as a new house purchase). Your contract should say exactly what you both want, and how much sharing (if any) you want to do of property and finances. Here are the issues that couples most often include in a living together contract:
- property and finances, including the property you had before you began the relationship, as well as the property either or both of you accumulate during it
- property inherited or received by gift during the relationship
- property bought during the relationship
- expenses, such as food, utilities, and housing
- what will happen to your property if you split up or if one of you dies, and
- a method for resolving any disagreements that later arise out of your living together contract, such as mediation.
Living together agreements do not usually cover personal aspects of your relationship, such as who does the cooking, feeds the dog, or cleans the house. In fact, agreements on nonmonetary issues are unlikely to be enforced in court.
See the sample living together contracts included here for details on how to prepare various types of agreements.
Who Needs a Living Together Contract?
Sometimes living together contracts are made to protect each partner in case the relationship ends. But more often, couples enter into them to communicate their needs and expectations, define their rights, and enhance one or both partners’ peace of mind at either the start of the relationship or when the couple makes a major purchase. Creating a well-crafted agreement not only helps you figure out how you really want to own your property, but also serves as a useful reminder if misunderstandings develop later or one of you dies without a will. Another important benefit of a living together agreement is that if one partner is supporting the other, or if one partner has given up a career in order to take care of the home or raise children, the agreement will protect the dependent partner by ensuring that issues of support and compensation are stated in writing. Otherwise, the dependent partner can be left with nothing after having given up a lot.
Obviously, you don't need a contract if you are in a brief relationship. But in a long-term and serious partnership, whether you're basking in the glow of having just "joined forces" or you've been together 20 years, you should consider the legal consequences of dealing with money and property. If you are planning to mix assets or share expenses, you should most definitely put your agreement in writing, especially if a significant amount of money is involved. If you're both stone-broke, with no property and little prospect of getting any soon, you can still benefit by deciding how you will handle money and property if it ever arrives. Also, you can put more emphasis on the practical issues of day-to-day living together, such as how expenses will be paid.
Even though some courts will enforce an oral agreement—or even an implied one—a written agreement is essential, though it’s surely no substitute for trust and communication. A contract won’t enable an unmarried couple to continue loving one another or prevent them from splitting up; but if times get hard, a written agreement can do wonders to reduce paranoia and confusion and help people deal with one another fairly. There are no national statistics on how many unmarried, cohabiting couples enter into living together contracts, but some lawyers say such contracts are on the rise as a result of more couples living together and new legal rulings that support the validity of living together agreements.
Legal Rules Governing Living Together Contracts
For the most part, courts and judges -- not legislatures -- have made the legal rules governing living together contracts. The leading court case is the well-known Marvin v. Marvin, 557 P.2d 106, decided by the California Supreme Court in 1976. It involved the actor Lee Marvin and the woman he lived with, Michele Triola Marvin. (She used his last name even though they weren't married.) In its Marvin case decision, the court announced what were to become the common legal principles governing the right of unmarried couples to make contracts. First, the court ruled that marital property laws do not apply to couples who are not legally married. Then, the court recognized that unmarried couples are here to stay. Finally, the court declared four contract principles:
- Unmarried couples may make written contracts.
- Unmarried couples may make oral contracts.
- If a couple hasn't made a written or oral contract, the court may examine the couple's actions to decide whether an "implied" contract exists.
- If a judge can't find an implied contract, she may presume that "the parties intend to deal fairly with each other" and find one partner indebted to the other by invoking well-established legal doctrines of equity and fairness.
Although Marvin directly applies only in California, other states have upheld the application of these principles to contracts made by unmarried partners -- both straight and gay. Depending on the state, however, a court may follow different legal rules. The courts of nearly every state and the District of Columbia now enforce written contracts between unmarried partners. (The exceptions are Illinois, Georgia, and Louisiana.) Most states also recognize oral (spoken) contracts. (Texas and Minnesota are the only states that have passed laws requiring contracts to be in writing, but courts in other states—including New York and New Mexico—have been unwilling to recognize implied agreements.) However, if one partner says there was an oral contract while the other emphatically denies it, a judge is unlikely to find that a contract was made, unless other evidence (such as a witness to the discussion about the contract) supports the contract claim.
Why You Need to Put Your Living Together Agreement in Writing
You can avoid a host of legal problems by putting your living together agreement in writing. A written contract covering who owns what is the only way to protect yourself and honor your collective intentions—whether you want to keep all your property separate or share some or all of it. Without some type of written agreement, you may face serious and potentially expensive battles if you separate and can’t agree on how to divide what you have acquired.
Putting your contract in writing needn’t be time-consuming or dreary (and it’s certainly better than having a judge write one for you as part of an expensive court fight). Approach the task in the spirit of clarifying your understanding and preserving the shared memory of two fair-minded people.
Sometimes one or both partners can be reluctant to sign a contract, believing it demonstrates a lack of trust in the other partner’s word. To the contrary, it’s a healthy dose of realism, recognizing that over time memories fade and feelings change, and a written contract can make you feel secure that your intentions at the time you made it won’t be forgotten. Without a written contract, it is almost impossible to enforce a claim of an oral contract in court. If your partner isn’t willing to sign an agreement, don’t rely on the oral promise—it’s best to consider yourself to be without a contract at all.
Getting Legal Help Preparing a Living Together Contract
If you're not sure whether living together contracts are valid in your state, you'll need to consult a lawyer or do some legal research of your own. Even if you know that you can make a legal agreement, you should seek a lawyer's help before signing any agreement that involves a lot of money or property -- or complicated estate planning. This is just common sense, particularly if one partner has substantially more assets than the other.