The Cohabitation Conundrum: What Happens to the House When you Break Up?

Written by Jaymi Naciri Posted On Wednesday, 29 November 2023 00:00

There are very clear laws that spell out what happens to community property in the case of divorce. These vary per state but are intended to protect each of the home’s owners when the union dissolves. But what happens when you’re not married? An ugly breakup can create even uglier financial circumstances if you’re not properly protected.

By the numbers

If you’re thinking of moving in with a boyfriend or girlfriend, you’re not alone. Cohabitation rates are rising, especially among younger populations. According to the most recent U.S. Census Bureau estimates, “The proportion of young adults who live with an unmarried partner continues to rise. Among those ages 18–24, cohabitation is now more prevalent than living with a spouse: 9 percent live with an unmarried partner, compared to 7 percent who live with a spouse. 15 percent of young adults ages 25–34 live with an unmarried partner, up from 12 percent 10 years ago.”

There are a number of reasons an unmarried couple would look to buy a home before—or instead of—marriage, such as: getting ahead of rising prices and interest rates; because owning a home is as much of—or more—a priority than marriage; or simply because you’re ready to start your lives together in a place that doesn’t belong to someone else.

But is it a smart decision? There are some risks involved you should be aware of. If you’re looking for the expert perspective, well, “Many financial planners advise against it,” said TIME: Money. “That’s because buying a home is often the biggest and most financially complicated move a couple makes, and unwinding it can be especially difficult for unmarried partners if the relationship ends.”

Get it in writing

Yes, you’re all in love, and isn't it exciting that you’re buying your first home together?! It is. But that love and excitement aren't enough to legally protect you should something happen to the relationship. While no one wants to think about “what ifs,” not considering your legal rights upfront could prove disastrous in a bad breakup.

“Unlike married couples, the property rights for unmarried couples are not afforded the same legal protections,” said FindLaw. “Since this is the case, it's in each person's best interest to write out a property agreement that spells out who owns what and how the property will be distributed should the couple separate. This is especially important if a couple acquires real estate together.”

When it comes to shared real estate, a cohabitation agreement is a contract that can provide each person with some legal cover in case of a split. Keep in mind that different states can have different requirements; the best way to make sure your agreement is legal is to consult an attorney.

According to Bankrate, these are the items that should be included in the cohabitation property agreement:

• “Type of ownership on the deed (joint tenancy with rights of survivorship or tenants in common)
• Percentage of the house each party owns
• Payment responsibility
• Buyout agreement
• What happens if there’s a job transfer
• Dispute process
• Exit strategy”

The deed, indeed

Remember that a cohabitation agreement may not be enforceable in your location. The only way to ensure you have an equitable right to your property is to make sure your name is on the title.

“The house belongs to the person whose name appears on the legally recorded deed,” said MoneyTalksNews. “It doesn’t matter what verbal agreements were made or who paid the mortgage. So make sure both parties are named on the deed.”

Financial responsibility

How financially responsible are you? And how about your partner? Checking your credit should give you each a good idea of how well the other manages their finances, but it’s a good idea to dig a little deeper—especially if there are some dings on one (or both) of your credit reports. Given the repercussions of getting in over your head with a mortgage, you want to make sure you ask the tough questions upfront to make sure you share the same philosophy on finances and have a plan to manage debt responsibly as a team.


A key component of that discussion is what your current expenses look like. It might be that you need to delay your purchase for a bit in order to pay off some outstanding debts, or redirect down payment funds to existing accounts. Talking to a lender can help you carve the best path for your particular situation.

Figure out how to split costs?

You might think this will just work itself out, but the reality is that financial issues are one of the leading causes of breakups and divorces. And the ongoing expenses are just one element of this discussion.

“Owning a home means coming up with a down payment and closing costs, covering property taxes and utilities, and paying repair and maintenance bills. Rarely can those financial responsibilities be split 50-50,” said Huffington Post. “One person may have the savings for a heftier deposit. One may earn a higher regular salary and find it easier to make mortgage payments. One may be saddled with student debt or a low credit score. One may be skilled with tools and ready to do repairs around the house, raising the issue of whether in-kind contributions have a monetary value and what that value should be.”

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