Real Estate Co-Owned by Unmarried Couples

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THE AMERICAN LAW INSTITUTE
Continuing Legal Education
Real Estate Co-Owned by Unmarried Couples:
Handling Contemporary Legal Issues
April 14, 2015
Telephone Seminar/Audio Webcast
Unmarried Couples and Property Ownership
By
Patricia A. Cain
Santa Clara University School of Law
Santa Clara, California
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Real Estate Co-owned by Unmarried Couples: Handling Contemporary Legal Issues
Prepared by: Patricia A. Cain, Professor of Law, Santa Clara University, April 2015
I.
INTRODUCTION: WHO ARE UNMARRIED COUPLES?
Unmarried couples may include committed couples who are spousal equivalents, whether
opposite sex or same sex. According to 2014, Census data, there are almost 8 million opposite
sex unmarried couples who are living together. The Census figures for unmarried same-sex
couples are less reliable, but the estimate is that there are just over 500,000 such couples.
For purposes of federal law, Registered Domestic Partners (RDPs) and Civil Union Partners
(CUPs) are treated as unmarried couples, even though they are virtually treated as married at the
state level. This difference in treatment can cause some complexity regarding tax issues.
Couples choose not to marry for a variety of reasons. Some couples are philosophically opposed
to marriage and, although their commitment to each other is as deep as many married couples,
they choose not to marry as a matter of conscience. Other couples choose not to marry because
they don't wish to be governed by the state's marriage contract which includes obligations of
support and property sharing. And, some couples opt to cohabit rather than marry in order to
avoid the so-called marriage tax penalty. Still other couples choose to cohabit as a trial run for
later marriage.
II. Who owns the Real Estate?
A. Title in One Partner Only/ Legal Theories that Support Ownership Claims by Other Partner:
1. Express Written Contract
E.g., Relationship Contracts, Living Together Contracts, or Buy-Sell Agreements
with respect to purchased property. After Marvin v Marvin, 557 P.2d 106 (Calif.
1976), most states are willing to enforce such contracts even though before 1976
courts might not have enforced cohabitation contracts because they were viewed
as being against public policy. To the extent the contract is founded on promises
of sex, the contract will not be enforced. But any such provision in an express
contract can generally be severed thereby saving the rest of the contract. See
Whorton v. Dillingham, 202 Cal.App.3d 447 (1988).
2. Express Oral Contract
See Ireland v. Flanagan, 627 P.2d 496 (Ore. Ct. App. 1981)(upholding oral
agreement between lesbians to share property despite fact that property was held
in sole name of one partner); Morone v. Morone, 413 N.E.2d 1154 (N.Y.
1980)(refusing to recognized claim based on implied contract, but approving
claims based on express oral contract); Kinkenon v. Hue, 301 N.W.2d 77 (Neb.
1981)(oral contract enforced); Dominguez v. Cruz, 617 P.2d 1322 (N.M.
Ct.App.1980)(valid oral contract).
3. Implied Contract
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A contract can sometimes be implied from mere fact of cohabitation and pooling
of assets, even though there is no joint ownership of property. See Marvin v
Marvin, 557 P.2d 106 (Calif. 1976)(first case to approve a claim based on implied
contract; the plaintiff, however, failed to prove the existence of any contract upon
remand). See also Cook v. Cook, 691 P.2d 664 (Ariz. 1984); Glasgo v. Glasgo,
410 N.E.2d 1325 (Ind. Ct. App. 1980); Wilcox v. Trautz, 693 N.E.2d 141 (Mass.
1998); Hay v. Hay, 678 P.2d 672 (Nev. 1984); Kozlowski v. Kozlowski, 403
A.2d 902 (N.J. 1979); Knauer v. Knauer, 470 A.2d 553 (Pa. Super. Ct. 1983);
Matter of Estate of Steffes, 290 N.W.2d 697 (Wisc. 1980);. Boland v. Catalano,
521 A.2d 142 (Conn. 1987)(heterosexual cohabitants; property claims of plaintiff
recognized despite fact that realty was in separate name of defendant and couple
maintained separate accounts).
4. Partnership
Implied partnerships are no different from implied contracts to share ownership
rights and gains from property. See, e.g., Carroll v. Lee, 712 P.2d 923 (Ariz.
1986)(heterosexual cohabitants; court held on the basis of joint ownership of
property and cohabitation that the parties had an "implied partnership or joint
enterprise agreement.")
5. Unjust Enrichment.
"Unlike claims for breach of an express or implied in fact contract, a claim of
unjust enrichment does not arise out of an agreement entered into by the parties.
Rather, an action for recovery based upon unjust enrichment is grounded on the
moral principle that one who has received a benefit has a duty to make restitution
where retaining such a benefit would be unjust. ... Because no express or implied
in fact agreement exists between the parties, recovery based upon unjust
enrichment is sometimes referred to as "quasi contract," or contract "implied in
law" rather than "implied in fact." Quasi contracts are obligations created by law
to prevent injustice." Watts v. Watts, 405 N.W.2d 303, 313 (Wis. 1987)
(heterosexual cohabitants; opinion by Abrahamson clearly explaining various
theories of recovery); Kinnison v. Kinnison, 627 P.2d 594 (Wyo.1981)
6. Quantum Meruit
Quantum meruit is an alternative claim to implied contract. It is a restitutionary
remedy measured by the reasonable value of services rendered. It requires proof
of benefit to defendant and loss to plaintiff and a judicial finding that it would be
unjust to allow the defendant to retain the benefit. It is not based on an express or
implied agreement for payment for services. Kinnison v. Kinnison, 627 P.2d 594
(Wyo.1981). See, e.g., Poe v. Levy, 411 So.2d 253 (Fla. App. 1982)(court refused
to recognize quantum meruit claim based solely on heterosexual cohabitant's
allegation that there was an agreement to pay for the services; facts alleged
suggested contract claim).
7. Constructive Trust
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A constructive trust is an equitable device created by law to prevent unjust
enrichment. ... To state a claim on the theory of constructive trust the complaint
must state facts sufficient to show (1) unjust enrichment and (2) abuse of a
confidential relationship or some other form of unconscionable conduct. The
latter element can be inferred from allegations in the complaint which show, for
example, a family relationship, a close personal relationship, or the parties' mutual
trust. Watts, 405 N.W.2d 303, 314
8. Resulting Trust
A "resulting trust" occurs when one partner advances money to purchase property
in the name of the other partner. The money must be advanced before or at the
time the legal title to the property is acquired. A resulting trust cannot arise from
matters coming into existence afterwards. See Slocum v. Hammond, 346 N.W.2d
485 (Iowa 1984)(heterosexual cohabitants; relief denied because lack of proof).
9. Partitioning Jointly Owned Property
Partition may be both a statutory remedy and a common law remedy. See, e.g.,
Watts v. Watts, 405 N.W.2d 303 (Wis. 1987)(recognizing both statutory and
common law partition rights). Any co-owner of property has the right to request a
partition. Generally if the property cannot be partitioned in kind, the court will
order a partition sale and split the proceeds.
10. Equitable Division under Divorce Statutes
In a case involving heterosexual cohabitants, the Washington court of appeals has
held that the statute providing guidelines for property division upon dissolution of
marriage, legal separation, etc., can also be applied to divide property acquired by
unmarried cohabitants in what was "tantamount to a marital family except for a
legal marriage." Warden v. Warden, 36 Wash.App. 693, 676 P.2d 1037 (1984).
The rules for dividing property acquired during a meretricious relationship were
clarified in Connell v. Francisco, 898 P.2d 831 (Wash. 1995)(only property
acquired during the relationship may be divided between the parties, as though it
were community property).
In Washington, these rights have been extended to same-sex cohabitating couples.
See Gormley v. Robertson, 83 P.3d 1042 (Wash. App. 2004)(equitable
distribution when couple split up). Recently, this principle has been applied to
vest 50% of property held at death by one cohabitant in the estate of the other
cohabitant. See Olver v Fowler, 168 P.3d 348 (Wash. 2007)(opposite sex couple
killed in automobile accident; property acquired during cohabitation was treated
as owned equally by them at the moment of death so that only half of the property
was administered in the estate of the male title holder).
NOTE: The Washington courts now refer to these relationships as “committed
intimate relationships,” whereas they were originally called “meretricious
relationships.”
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