Living Together? A Domestic Partnership is a Must Have -Part Deux.

wb051448Last week I highlighted some of the legal issues impacting non-married couples who live together and then break-up.   One of the most daunting tasks upon a break-up is how to equitably divide real property that may have been purchased together or for which both parties contributed money or labor.

Remember that Minnesota marital divorce laws do not apply to Minnesota non-married couples whether opposite gender or same-sex.

Real Property Division

Minnesota non-married couples who buy a home together can take title in one of two ways:  One way is to hold the title as joint tenants.  Joint tenancy means both parties own the property equally and have rights of survivorship when one party dies. Another way is to hold the property as tenants-in-common.  Tenants-in-common means each party owns a specific share ( e.g., 10%, 25% 30% or 50% ).  If one party dies, then that party’s will conveys his/her share of the property.

Property titled in both parties can usually be divided or one party can buy out the other’s percentage of ownership.

Assuming both parties are on title, then one or both parties may bring what is called a partition action. Minn. Stat. Section 558.01 Partition. Sale. Who May Bring an Action, which reads as follows:

“When two or more persons are interested, as joint tenants or as tenants in common, in real property in which one or more of them have an estate of inheritance or for life or for years, an action may be brought by one or more of such persons against the others for a partition thereof according to their respective rights and interests of the parties interested therein, or for a sale of such property, or part thereof, if it appears that a partition cannot be had without great prejudice to the owners.”

What happens if Party A buys the home and it is titled in his/her name alone and  Party B makes financial contributions to the home?  For example, the non-titled Party B  contributes to the mortgage, the taxes, the repairs or improvements to the property.

If these parties have a domestic partnership agreement that addresses this contribution issue, then the agreement determines how Party B is reimbursed upon the break-up.  The partnership agreement, however, must meet certain particular standards with attention to the consideration* in the agreement.  Drafting these agreements requires knowledge of contract law and the following statutes.

Minnesota Domestic Partnership Agreements and Minnesota Statutes

Minnesota passed two statues after a California case involving the actor Lee Marvin. The case Marvin v. Marvin [18 Cal. 3d 660, P.2d 106 (1976)]** is referred to as a “palimony” case.   Marvin’s live-in girl friend bought suit to share Marvin’s earnings.  The parties had no written agreement.  The California Supreme Court ruled that the parties’ oral agreement to share earnings was ok so long as the agreement did not rest on illicit meretricious consideration. Which means a party cannot contract to share earnings or property if the only consideration for the agreement is sexual favors.  Marvin’s girl friend overcame the lack of a written agreement required by the Statute of Frauds with evidence.

The Statute of Frauds requires that all agreements  are reduced to writing if that agreement is to be enforced by either party.  Oral agreements are generally not enforceable unless the Statute of Frauds is overcome by evidence.  Agreements involving real property must always be in writing.

Minnesota’s two statutes read as follows:

Minn. Stat. Section 513.075 Cohabitation; Property and Financial Agreements.

“If sexual relations between the parties are contemplated, a contract between a man and a woman who are living together in this state out-of-wedlock, or who are about to commence living together in this state out-of-wedlock, is enforceable as to terms concerning the property and financial situation of the parties only if: (1) the contract is written and signed by the parties, and (2) enforcement is sought after termination of the relationship.”

The companion Minn. Stat. Section 513.076 Necessity of Contract reads as follows:

“Unless the individuals have executed a contract complying with the provisions of section 513.075, the courts of this state are without jurisdiction to hear and shall dismiss as contrary to public policy any claim by an individual to the earnings or property of another individual if the claim is based on the fact that the individuals lived together in contemplation of sexual relations and out-of-wedlock within or without this state.”  

Minn. Stat. Section 513.075 expressly applies to an opposite gender relationship and doesn’t include same-sex couples. It is just a question of time before this language expressly referring to opposite couples is modified.Nothing in these statutes prohibits a same-sex couple from  contracting with one another in a domestic partnership agreement.

The nature of the consideration in these agreements applies to all non-married partnership agreements. No contract is enforceable if the only consideration is an exchange of earnings or property for sexual favors.  Such agreements are against public policy for all non-married couples and will not be enforced. All domestic partnership agreements, whether opposite gender or same-sex, must have consideration that is valid.

What happens if Party B has contributed money towards Party A’s real property and Party B is not on title and there is no domestic partnership agreement?  Is Party B out his/her contribution?  Not necessarily.

The law contemplates that Party B may have contributed sums of money to Party A’s benefit and that Party A may have benefited unjustly.   The legal concept used to remedy the wrong done to Party B is called unjust enrichment and constructive trust.   Both of these concepts are equitable in nature, which means that it may not be fair for one party to gain at the expenses of the other party.  The Court will look to see if Party A is unjustly enriched; and, if so may impose a constructive trust on the real property equity holding Party B’s interest safe until the property is sold or Party B is otherwise reimbursed.   An unjust enrichment/ constructive trust action means time and money in court. It is smarter and a good use of preventive law to enter into a properly drafted domestic partnership agreement before the river of love goes muddy.

A little preventive lawyering via a well drafted domestic partnership agreement  can save both parties time, money and stress down the road.   Couples can enter into an agreement at anytime – before the move-in date or after many years together.

*Consideration defined:  http://dictionary.law.com/Default.aspx?selected=305

**Marvin v. Marvin See http://scocal.stanford.edu/opinion/marvin-v-marvin-27965 for an interesting read)  Note: California law does not apply in Minnesota.

Kate Willmore, Saint Cloud, Minnesota, Family Lawyer and Mediator

kaw@katewillmorelaw.com

(320) 217-6030

Copyright 2013

About Kate Willmore, Esq.

Kate Willmore, Saint Cloud, Minnesota, divorce, custody and family attorney brings over 25 years experience to every client's legal matter. *** Licensed in Minnesota and in California

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