Suppose you’ve lived with the love of your life for many years, but as an unmarried couple. Suppose during those many years the two of you have purchased property together, made a nice home for yourselves, and accumulated a lot of assets. How does the fact that you never got married come into play when it’s time to divide your property?
The first thing you need to know is Tennessee does not have common law marriage. It doesn’t matter if you’ve lived together for two years, ten years, or thirty years. It doesn’t matter if you wore a ring the whole time and referred to this other person as your spouse. Unless you’ve actually got a marriage license and were married in front of a spiritual leader, judge, clerk (or other person allowed by statute) with a valid marriage license, you have not become married in Tennessee and you have no marital property to divide.
Since you’re not married, the laws concerning divorce, domestic property division, division of marital debt, and alimony are of no help. All that’s left are the principles of contract and partnership law, which were written for business relationships, not domestic issues. However, if the situation is right, these statutes can help.
Tennessee law will recognize people as partners when two or more people act “to carry on as co-owners of a business or other undertaking for profit”. If you and your spouse have invested in an asset with the intent to make income from it, this statue may help you. However, these partnership arrangements only come to life in the right circumstances.
Examples of partnerships created during domestic relationships
A couple of examples may be helpful. The first is Story v. Lanier, a case where a couple had lived together for 30 years. In that time they had accumulated a decent amount of property including a farm, a restaurant, and Mr. Lanier had about $90,000 in a bank account. The farm was on land Mr. Lanier purchased from Ms. Story. He then leased the land to local farmers, taking a portion of the sales of crops grown on the property. The restaurant was a business that Mr. Lanier purchased because the parties had agreed Ms. Story would manage it.
The court found that even though there was no written agreement, the parties had created a partnership for the purpose of operating the restaurant, and Ms. Story was entitled to be compensated for her share of it. The court came to this conclusion because she worked at the restaurant for several months with no compensation, managed the books, and a former employee testified that she was under the impression she worked for both of the parties.
On the other hand, even though Ms. Story had once owned the property where the farm was located, had helped some with the farm, including keeping track of the hours Mr. Lanier worked on it, and the farm was making an income, the parties had not created a partnership, and Ms. Story would receive nothing from this property. Finally, Ms. Story would not receive any of the $90,000 Mr. Lanier had in the bank.
On the other hand, if the couple had been married, there would have been no question that all of these assets would have been marital property, and divided according to the laws of property division in a divorce.
A second example is the recent case Via v. Oehlert. Here, Mr. Oehlert purchased a house in 2002. Ms. Via moved in with Mr. Oehlert in 2003 and the couple lived in the home together until 2009. During that time Ms. Via estimated that she spent about $20,000 on improvements to the home, and put in many hours of labor without any compensation. The improvements included electrical work, plumbing, and remodeling the interior which included blinds, drapes, and wallpaper. She also purchased materials for, and aided in the construction of, a woodworking shop on the property.
Furthermore, there was a four-year period of time where Mr. Oehlert worked out of state, during which Ms. Via lived in the house. While he continued to pay the mortgage on the home, Ms. Via paid all the utility bills and maintained the property.
When their relationship ended in 2009, Ms. Via filed a lawsuit to dissolve their partnership and recover her portion of the assets they had accumulated together. She said that the couple had effectively worked as partners on the property and had improved the property with the intent to sell it at a profit. After all, they had carried on as co-owners of an undertaking for the purpose of making a profit, right?
The trial court dismissed her claim entirely, and the Appellate Court agreed with the trial court. Ms. Via would receive nothing because while people do purchase real estate hoping it will gain value, this is not enough to convince a court that these parties purchased and improved this property as a business venture. The Court essentially said that finding a partnership in these circumstances “would pull the theory of implied partnership/joint venture too far from its moorings.”
What you need to know
Marriage is more than a piece of paper. In both of these circumstances the results would have been very different had the couples been married. Maybe the guys knew what they were doing, maybe they didn’t. Either way, I would suggest to you that you be very careful when buying any kind of property with someone who is not your spouse. This blog post is a very short summary of the law in this area, and if you happen to be in a situation like this, you really should consult with an attorney to find out if the law can help you. Contact me to set up an appointment to discuss your options.