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When couples get married, they enter a contractual relationship that commits them to an established set of laws and rules governing their rights and responsibilities toward each other. Among other things, those laws establish their property rights when they get divorced. But when unmarried couples move in together, they don't automatically agree to any state-imposed contractual relationship, and they don't gain any legal rights to each other's property or responsibilities toward each other. That can create problems if they split up—and sometimes even while they're still together—particularly when they've lived together a long time and merged at least some of their finances. One way to prevent those problems is to create a cohabitation property agreement. But before you do that, you should understand the basic legal requirements for these agreements, who needs them, and what they should cover.
A cohabitation agreement is type of contract between two people who are living together as unmarried partners. Like any other contract, it's basically an agreement to do (or not do) certain things in return for some benefit—what's known in legalese as "consideration." A valid contract must include consideration. Otherwise, it's essentially a promise to provide a gift—and, as such, courts won't enforce it.
Cohabitation contracts are a way for unmarried couples to spell how they've agreed to handle their property and finances during their relationship and in the event that they part ways.
As long as you have a cohabitation agreement that meets the legal requirements in your state (more on that below), you may ask the court to enforce the contract if your ex refuses to do what they've agreed to do.
Until the 1970s, courts generally refused to enforce contracts that were based on relationships between unmarried couples, because they assumed that the consideration for the contract—such as the benefit that a higher-earning partner received for sharing property with the lower-earning partner—was sex. That meant courts saw these contracts as akin to paying for sex—which is illegal.
That started to change with the famous Marvin case, in which the California Supreme Court held that unmarried couples may enter into enforceable contracts with each other about their earnings and property rights, as long as "sexual services" aren't the consideration for those agreements. (Marvin v. Marvin, 557 P.2d 106 (Cal. 1976). Although the Marvin case applied only in California, courts in almost all other states eventually followed this basic principle—albeit with some variations on the specific requirements for a valid, enforceable cohabitation agreement.
Courts in different states have taken varying approaches to what are popularly known as "palimony" agreements.
The legal rules for cohabitation agreements have mostly developed through court decisions rather than laws. Although almost all states recognize these agreements to some degree, courts in different states have taken varying approaches to what are popularly known as "palimony" agreements. For example:
In a few states, the courts hold fast to the older view that cohabitation agreements aren't legal. For instance:
It remains to be seen whether courts in these states will change their views on this issue. In the meantime, you should speak with a local lawyer if you live in Illinois, Georgia, or Louisiana, and you're hoping to create a cohabitation agreement that would hold up in court.
Some unmarried couples who move in together keep their finances separate, splitting rent and other household bills as if they were simply roommates. But many other couples—especially those who live together for a considerable amount of time—blend their finances at least to some degree.
Obviously, you don't need a cohabitation contract if you're in a brief relationship. But very few couples in the early stages of a relationship know how long it will last. And couples who started out by keeping their money separate often begin merging their finances gradually—without ever talking about what that means for their relationship and futures. That's almost always a mistake that will come back to haunt them—particularly if they split up.
If you break up but have a clear, written cohabitation agreement, you're more likely to avoid an expensive court fight over your property, debts, and any expectations for future payments between you. But cohabitation agreements aren't only about what happens when the relationship ends. They can also help couples be clear and up-front about their needs and expectations, which can minimize the chance of misunderstandings down the road.
Cohabitation agreements are especially important if you and your partner:
It is true that in some states and some circumstances, a judge might find that an unmarried couple has an enforceable a cohabitation contract even though the partners don't have a written agreement. For example:
As a practical matter, however, the lack of a written cohabitation agreement can lead to a host of legal problems. If you and your ex don't agree about the existence or specifics of an oral (or implied) agreement, it will be very difficult—and expensive—to prove your claims in court. Whether the two of you want to keep your property separate or share some (or all) of it, the only way to protect yourself and honor both of your intentions is to have a written contract that both of you have signed.
Putting your contract in writing needn't be time-consuming or dreary. Nor does it demonstrate a lack of trust in each other's word. To the contrary, it's a healthy dose of realism, recognizing that memories fade and feelings change over time. Approach the task in the spirit of clarifying your understanding and preserving the shared memory of two fair-minded people.
If your partner isn't willing to sign an agreement, don't rely on any oral promises. It's best to consider yourself to be without a contract at all.
A cohabitation contract can be comprehensive, covering every aspect of your relationship, or it can be specific, covering only one transaction (such as buying a house). The agreement should spell out exactly what you both want, and how much you want to share property and finances, if at all. Here are some issues that couples typically include in a cohabitation property agreement:
(Learn more about what to include in a cohabitation contract, along with tips for preparing it and what to do when it's done.)
Especially in the first year or two after they get together, many unmarried couples keep all or most of their money and property separate—with the occasional exception of a joint account to pay household bills or an agreement to purchase one or more items jointly.
You may think that keeping your property ownership separate is so simple that you don't need a written agreement. Think again. As we've seen, some courts may recognize oral or implied cohabitation agreements. So the lack of a written contract might be an invitation for your erstwhile partner to later claim that you had a spoken or unspoken agreement to share your property.
Here are a few things you might include in an agreement to keep your property separate:
Attach a list of major items you own to the agreement (at least list all items worth $100 or more). Be sure to update your list from time to time—once a year is a good period.
Either when you move in together or at some later point in your relationship, you may decide to share your income and property. Typically, this agreement may:
Attach a list of all the property each of you owned separately before the agreement, as well as a list of your jointly owned property (which you'll need to update regularly).
You should have separate agreements if you plan to buy and co-own or take title to a home together or buy a car or other major purchase together.
You can learn more details on creating a cohabitation contract, find sample contracts for different situations, and get access to downloadable forms in Nolo's book, Living Together: A Legal Guide for Unmarried Couples.
If you're not sure whether living together contracts are valid in your state, you can ask a local attorney. It also makes sense to get a lawyer's help to prepare or review any agreement that involves a lot of money or property. You'll want to find a lawyer who's knowledgeable about family law and contract law in the context of unmarried couples. And if your agreement involves complicated estate planning, you should consult with a lawyer who has expertise in that area.