Millennials appear to be less likely to marry and more likely to live together. As the Huffington Post explains, “[c]ouples are now more apt to consider cohabitation as their next stage in their relationships before they begin to consider marriage.” Attorneys who are used to preparing prenups and postnups for their marrying clients may need to prepare more cohabitation or “living together” agreements—the next big thing may be nonups!
First, your clients need to understand what rules apply if they don’t make any agreement (and none can be implied from their conduct): Each party’s property is his or her own property and neither party has any claim on the property of the other.
For long-term cohabitants with significant property this can be a harsh reality.
That’s where cohabitation agreements come in: You can draft an agreement on personal financial matters between two unmarried parties residing together as a couple. These are generally enforceable as long as they’re not tantamount to contracts for prostitution.
Although these agreements may be written, oral, or implied, it’s much better that they be in writing. Oral agreements are subject to the statute of limitations under CCP §366.3 (but equitable estoppel may also apply) and they often present issues about proving the existence of the agreement. These agreements also may be subject to the statute of frauds on property transfers.
The purpose of a written cohabitation agreement is to clarify which agreements the parties made—or didn’t make—about their personal finances. Here are some main points to consider including:
- Keeping property interests separate. To avoid allegations of an oral or implied agreement to share property, it may be useful for the written agreement to set out
- what each party already owns;
- that property acquired by either party will belong to that party; and
- that neither party will acquire any interest in the other party’s property or any right to receive support from the other.
- Providing for joint property. If the agreement is about a specific piece of property, the easiest way to show that it’s jointly owned is to take title in the way in which the parties intend to own it, i.e., as tenants in common or as joint tenants. The holder of legal title is presumed to be the owner of full beneficial title. Evid C §662. When the parties intend a general sharing of earnings and accumulations, documents of title may not be available for every item accumulated, so it’s a good idea to put the agreement to share (sometimes referred to as a “pooling agreement”) in writing.
- Providing for treatment as though married. In theory, an agreement by unmarried parties to be governed by the rules applicable to married people is enforceable. But many attributes of marriage (e.g., the right to receive survivor benefits, the right to sue for loss of consortium) can’t be created by a contract between cohabitants, and certain rights, such as the right to sue for wrongful death, are purely statutory. The enforceability of this type of provision is theoretical because no published decision addresses a written agreement to be treated as married. In the one case addressing such an oral or implied agreement, the court held that it couldn’t award payments of money pending trial under an alleged implied agreement to provide support after the end of the relationship just as if the parties had been married. Friedman v Friedman (1993) 20 CA4th 876.
Get specific guidance on drafting cohabitation agreements, including sample provisions and complete sample agreements, in CEB’s California Marital Settlement and Other Family Law Agreements, chap 19. For guidance on agreements between couples who are registered or plan to register as domestic partners, turn to CEB’s California Domestic Partnerships and Same-Sex Marriage, chap 5.
Other CEBblog™ posts you may find useful:
- What Can and Can’t Go Into a Premarital Agreement
- Using Postnups to Renegotiate a Marriage
- Until the End of the Contract Do We Part
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