The October 15, 2010 edition of USA Today informs us the business of living together without benefit of marriage in what is termed a “committed relationship” is becoming more and more accepted. What was a generation ago deemed “living in sin” is viewed as a bad thing by only 38% of Americans. And perhaps, more importantly more than half of Americans who marry have lived together before they married. The US Census Bureau tells us that more than 16,000,0000 of us are living together as couples and more than 90% of those couples are of the opposite sex.
The law of living together in Pennsylvania makes no distinction based on sexual orientation. The law is essentially no law but what the parties make by way of contract. Married folks have a Divorce Law; they have protections related to health insurance and estates law because of how Pennsylvania statutes are written. But they do not include couples who choose to live together without benefit of marriage.
Unfortunately, many couples tend to ignore this gap in the law. Typically they form contracts in which they have what is called joint and several liability without thinking about it. Joint and several liability means that where two people sign a contract with a landlord, a home seller, a mortgage company or an auto lender, they are agreeing that the party in power (the seller, car dealer, landlord etc) can pick and choose who they pursue for their legal remedies.
What does this mean in practical terms? Your boyfriend has bad credit. If you buy the car he wants, it will be $80 a month cheaper if you finance it than if he does. He’s a good guy. So you buy the car; or perhaps you “just” co-sign the note. Next thing you know, he finds another love or loses his job, or both. Suddenly, GMAC is calling you. You explain that it’s his car, he’s a low life and your credit has always been perfect. Well, not any more. You agreed to cover his debt and GMAC really is not in the relationship game. They want money and they have little concern for who’s driving. If the car is titled in your name, you could probably re-possess the vehicle but the guys and girls who repo cars don’t often show up in the yellow pages.
It gets worse with houses. It has become very common for couples to buy their first home before they tie the knot. Once the marriage does take place they could re-title the property into a tenancy by the entireties. This would protect them from some creditors and would establish a mechanism (the Divorce Code) to divide the property equitably if the marriage does not work out. But rarely do couples realize the legal difference. Divorce Courts have jurisdiction over property acquired during the marriage. That does not include property acquired before the marriage. That property is partitioned. Under partition law, you are presumed to have gifted the money each of you put into the enterprise. If the property has to be sold, the sales costs are subtracted, the liens cleared and each co-owner gets half of what is left. So if you put down $80,000 of the $100,000 down payment and paid all of the mortgage for the next five years, your spouse will get a windfall that a Divorce Court might otherwise correct.
So how does one protect from these problems? First, don’t get involved in any joint debt unless you are married and as little as possible even after you are married. Married or not, it’s no fun being responsible for debt your friend or spouse ran up while having a good time at your expense with someone called “not you”. Second, if you must make that home purchase before marriage or if you are going to form a business or loan money to your amour get the deal in writing. Yes, it is possible to make these agreements orally but judges are going to look at you as if you are crazy when you come to court claiming that you and your girlfriend orally agreed to form a business together. For young people, engaging lawyers to spell out these kinds of agreements seems like an unnecessary expense. But, if you asked anyone who has been caught with a bad relationship and no written understanding, that person will tell you that this kind of legal engagement is money well spent.