When Live-in Lovers Break Up: The Financial Consequences

Cutting ties isn’t so easy when you’re also roommates.

Cutting ties isn’t so easy when you’re also roommates.
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Before moving in with your partner, consider these tips to protect yourself financially:

Put both names on the lease. Pierre Calzadilla, a rentals team manager at Trulia.com, a real-estate listings and information resource, says this is a fundamental part of sheltering your finances. Having the lease in both names makes your partner equally liable to pay rent—meaning you won't get dumped with the costs should you break up.

Look closely at the lease before signing. Like many young couples, you're looking for a one-bedroom unit. Keep in mind that you may have a hard time breaking the lease should you part ways. In some cases, renters are locked into a lease for the remainder of their contract.

Some landlords and management companies charge a penalty of one extra month's rent, while others allow you to break the lease if you pay a nominal "move-out fee" and find a tenant to replace you, says Alex Starace, a Zillow contributor and senior blogger for MyFirstApartment.com, an online guide for consumers looking to move.

Draw up a roommate agreement. Agreeing to split the cost of utilities, for example, may be worth laying out in a roommate agreement. In many jurisdictions, as long as an agreement is signed and dated and both parties have copies, Calzadilla says it will hold up in small claims court. However, relationship experts caution that this may make your partner feel like you're asking for the equivalent of a prenuptial agreement, which can scare some people away.

[See 12 Money Mistakes Almost Everyone Makes]

Put cohabitation on hold (at least until the time is right). While many say it's a good idea to live with your partner before marriage, some experts, including Fee, disagree. "When I hear couples moving in together [to save money], I cringe," she says. "Such a commitment should not be financially based. There's so much more that goes into a healthy, respectful, loving relationship. You don't want the No. 1 reason you chose a mate to be because that person was a good financial decision." Fee recommends rooming with a friend if money is tight and waiting until marriage to live together.

Callahan, however, thinks couples don't have to be on the marriage track if they want to move in together; they just need to be in agreement as to what would happen should they break up. And for those dreaming of wedding bells? "Sometimes people think everything changes when you get married," says Callahan, "but sometimes everything changes when you move in together before you get married."