Agreements for Living Together
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Agreements for Living Together

June 2013

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With all the news about same-sex marriage and changing norms between partners, attorneys often overlook a useful tool for their family-law clients: the cohabitation agreement. These are much the same as a prenuptial agreement, but designed to govern the relationship between parties who are not married.

Clients who have created significant wealth and perhaps survived a difficult divorce may promise never to marry again - not realizing that the decision to live with a partner can also create significant risk to financial independence. Although California does not recognize common law marriage, the Golden State has a more nettlesome tradition on the books - a Marvin action.

The landmark case of Marvin v. Marvin (18 Cal. 3d 660 (1976)) is still good law, and when that precedent is combined with developments under family law concepts of fiduciary duty, it creates risk and exposure for many clients.

The effect of the Marvin ruling is simple enough: Express contracts between nonmarital partners are enforceable. Even in the absence of a written agreement, the court will inquire into the parties' conduct to determine whether it demonstrates an implied promise. The court may also employ the doctrine of quantum meruit, or equitable remedies such as a constructive or resulting trust, when warranted by the facts. (See Marvin, 18 Cal. 3d at 665.)

One way for attorneys to help their clients avoid the difficulties of a Marvin action is to plan ahead by negotiating a cohabitation agreement. Here are some factors to keep in mind:

Process. The parties should think carefully about how they want to come to an agreement. Should they use a third-party facilitator, such as a mediator or a therapist? Should they work together with a neutral lawyer, or with each side having an advocate? The person(s) chosen should possess the proper skill set, both in terms of legal knowledge and in ability to work with the individuals involved. The process often sets the tone for the negotiations to follow, and ultimately it can affect the validity of the agreement itself.

Independent representation. An agreement written on the back of a napkin may be worse than no agreement at all. Make sure that each party has competent and qualified legal counsel with experience in cohabitation agreements as well as family law.

Goals. While one party may want to limit financial risk, the other may have issues relating to fairness, security, or other personal concerns. The best way to create an agreement that will satisfy both parties is to have each identify his or her needs, desires, concerns, and fears. This will help them prioritize issues early during negotiations.

Disclosure. A premarital agreement made without prior financial disclosures is generally not enforceable. (See Cal. Fam. Code ยง 1615(a)(2)(A).) Although no similar statute governs cohabitation agreements, it is more difficult to enforce an agreement when one party was not fully informed of the rights they were waiving. Parties should carefully consider how much information should be disclosed so that the agreement will withstand judicial scrutiny.

Changes. The agreement should provide that any changes must be in a writing signed by both parties. Such a provision will foreclose the parties from later arguing that there was a subsequent oral amendment to an otherwise valid written contract. The agreement should also stipulate that the parties' conduct will not be used to undermine clearly stated terms.

Integration clause. A written document signed by the parties should provide that it constitutes their entire agreement and that there are no other "side" or oral agreements. This will go a long way toward heading off the problem of a later-claimed oral promise or some agreement implied from conduct.

Documentation. As with a premarital agreement, the parties must enter into the contract freely and voluntarily. It is crucial to properly document not only the parties' negotiations, but also their execution of the agreement. A videotape of the happy couple signing the agreement can go a long way to dispel later claims of duress.

Common sense. A good cohabitation agreement should give the parties more certainty and reduce the risk of a misunderstanding should the parties subsequently break up. Lawyers who assist cohabiting parties should ask a lot of questions and use common sense.

In the end, if the agreement reached is thorough, fair, and enforceable, the parties will likely send you friends and colleagues who are similarly situated.

Raquel L. Sefton, a partner at Sideman & Bancroft in San Francisco, is a certified family law specialist and head of the firm's Family Law Group.

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