Unintended Consequences of Unmarried Cohabitation

According to statistics put together by the Alternatives to Marriage Project, there are 12 million unmarried partners in the United States, creating a little over 6 million unmarried "households." This number has increased over time with cohabitating partners increasing in number by 88% from 1990-2007. While a little over half of those in cohabitation relationships marry within 5 years, the other half either breaks up or continues to live together without marrying (about 10% continue to live together without marrying). While supporters of Alternatives to Marriage tout these as encouraging numbers, such an arrangement produces significant legal issues when unmarried cohabitants decide to split up. (http://www.unmarried.org/statistics.html#living-together).

Unlike a marital relationship, under law, there is no "cohabitation property," like there is marital property in a marriage. Therefore, the usual remedies of splitting property through either community or equitable division are not applicable.

In Tennessee, a recent trend has emerged that has attempted to merge ideas of implied partnerships in business law and connect them to cohabitation relationships in order to divide property. The three keystone cases on point are Story v. Lanier, 166 S.W.3d 167 (Tenn. Ct. App. 2004); Montgomery v. Montgomery, 181 S.W.3d 720, 724 (Tenn. Ct. App. 2005); Via v. Oehlert, 347 S.W.3d 224 (Tenn. Ct. App. 2010), appeal denied (Apr. 12, 2011).

The first important case is Montgomery v. Montgomery. This case was so contested and massive the appeals court took time to list that, "The pleadings in the record comprise five volumes and 745 pages. It took several days to complete the trial and the transcript alone is over 1200 pages, excluding the 341 exhibits marked for identification of which 124 were admitted at trial." Furthermore, the case was first filed in May of 1999, and was not finally resolved until March of 2005.

In the Montgomery case, the couple had lived together for 29 years, starting in 1969 and had a child in 1970. During the course of their cohabitation, the couple amassed a large amount of wealth and owned several businesses, including a masonry business, an insurance business, a marina, a mini-mall, an apartment complex known as Eastland Apartments, and two Nautilus gyms.

Because there was no marriage or a written agreement forming a partnership, the court applied the law concerning an implied partnership under the Revised Uniform Partnership Act. Because the couple was unmarried, the court did not consider things like retirement benefits, homemaking contributions, or other matters that emanated from the domestic relationship. If the couple had been married, then these considerations would come into play, but the court focused solely on the business relationship aspect of the couple. Once it reached this area, the court analyzed the case strictly as a business relationship. The court specifically went out of its way to say that statutes that normally apply to the dividing of marital property do not apply to these cases. Further, the court refused to use any law within the domestic relations statutes (Title 36) because they did not apply to these cases.

The Via case is about an unmarried couple with a dispute over who owned a house the two had lived in. The house was titled in the defendant’s, Oehlert, name. After Oehlert and Via rekindled their relationship, Via sold her mobile home and moved in with Oehlert. Via lived with Oehlert for about 5-6 years. During that period of time the two of them improved the property and Via estimated she put $20,000 in improvements into the property while living there. During one period, while Oehlert worked overseas, Oehlert paid the house payments and Via lived in the house and paid utility bills. After breaking up, Via continued to live in the house while Oehlert moved out. While living there Via received an offer to sell the house for $100,000-$125,000, but Oehlert refused to sell.

Because the couple had not married, the court relied upon the laws of partnership. The court evaluated the couple on the basis of a joint venture. Further, because there wasn't any writing to create the partnership, as would likely exist in a normal partnership, the court looked at the couple as a possible implied joint venture (the burden of proof for doing this is through clear and convincing evidence). The court ruled against Via because previous cases had been able to use a joint business between the two couples as evidence of a joint venture. It refused to grant an implied joint venture in this case because "to hold that the parties entered into a joint venture for profit solely because they lived together and jointly contributed to the appreciation of real property would pull the theory of implied partnership/joint venture too far from its moorings."

Prior to these two cases, the court in Story v. Lanier imposed a constructive trust on an unmarried couple to avoid "unjust enrichment" by one of the parties over the other. Courts, at least in Tennessee, try to accomplish equity in unmarried break ups, but that is not always possible, or required, as it is in marriage.

Any couple considering cohabitation, however, should be wary of entering into such a relationship. Cohabitation may provide an "alternative to marriage" but it provides none of the legal protection that marriage provides. In a marriage, a homemaker receives equal legal standing as the main breadwinner and even has the option of spousal support after a divorce. In a cohabitation setting, none of these protections would be awarded, and property is not necessarily deemed joint between the parties. Courts seem highly unwilling to stretch partnership law to protect cohabitating couples. Couples that decide to enter into a cohabitation relationship do so at their own peril as they receive little to no protection under law.

Thanks to guest blogger Daniel Vaughan, Regent J.D. Candidate 2013, and current Family Law student for this provocative piece on the implications of cohabitation for family restoration.