When unmarried people live together, they begin to collect assets together, much like married couples. In most cases, these individuals aren’t protected by marital laws, so there is no requirement that they split assets upon moving out or breaking up. Fortunately, these individuals can opt to create a property agreement that indicates who owns what in the case of a separation.
Is it important to create a property agreement?
This is very important in the case that an unmarried couple buys property together. Here’s an example. James and Lily live together. They decide to purchase a home, but it’s only placed in Lily’s name since she has better credit. James pays the mortgage half the time, while Lily pays the other half. They decide to break up, and Lily technically has all the legal power to keep the home, since it’s in her name. James could end up losing everything he’s put into the home.
What can James do to protect himself?
With a property agreement, James could show that he and Lily intended to buy the home together and that he’s entitled to half the value of the home. It may also make him responsible for half the debt of the home.
Another agreement they might consider is a cohabitation agreement. It states who owns which assets, how income or expenses are split and how things like credit cards or debts will be managed during or following the relationship. The agreement may even have information on how to resolve disputes about property if they arise during a separation. Their attorneys can help them create a property agreement or cohabitation agreement that’s right for their situation.
Source: FindLaw, “Cohabitation Property Rights for Unmarried Couples,” accessed Feb. 19, 2017