Splitting Costs When Unmarried and Cohabiting 

Cohabitation is increasingly common, as friends, family members and unmarried couples choose to live together to save costs or share household responsibilities. When a cohabitation agreement is entered into for mutually compatible reasons, this arrangement can benefit both parties. However, when disagreements arise living together unmarried can create very serious problems down the line.

Here is a look at some useful advice to help those who are in or about to enter into a cohabitation situation to live together harmoniously.

Before moving in

It is essential that before a sale or tenancy contract is signed, all adults who will live in the property agree how expenses will be divided to ensure fairness and to prevent disputes from arising in the future.

Should the parties fail to reach an agreement on how they would fairly distribute the costs of living together in a shared property at this stage, they should consider whether proceeding with the arrangement is a sensible course of action.

This should be in a written agreement, known as a cohabitation agreement [1]. Having a written agreement prior to entering into a cohabitation situation will help to resolve misunderstandings and disagreements should they occur down the line. Any agreement reached verbally will almost certainly not be enforceable.

What should be included in a cohabitation agreement

The agreement must cover the way in which expenses will be shared. This will include who will assume responsibility for each bill, whether they will be proportionally split at the end of each month based on actual costs incurred or whether both parties will pay into a joint bank account from which all bills will be paid.

The agreement should detail what assets and debts each party has upon entering into the cohabitation and the ongoing responsibility for each one.

During the period of cohabitation, it is recommended to update the agreement when new expenses arise or new property is acquired. This is useful to ensure that each person is contributing fairly to the maintenance of the shared property and to determine ownership interests in newly acquired property to help resolve any disputes that may arise.

The Law in New Mexico

Property ownership between unmarried persons is based on title in New Mexico, so if a property deed of ownership is in only one person’s name, that person has legal ownership of the property. If two or more parties contribute to mortgage payments or property improvements, this can potentially generate some interest in the property if disputes arise in the future but generally speaking, the person who is on title is the owner and will continue to be. It therefore makes sense to delineate each party’s ownership interest in writing or at least keep careful record of any contributions toward the property, including “sweat equity”.

If an unmarried couple would rather own the property together, they could choose to buy the property with a joint tenancy with the right of survivorship [2], which allows either party to assume full ownership should their co-owner pass away.

If one or more parties has a child from a previous relationship, they should consult with their ex-partner and, if necessary, an attorney with a detailed understanding of family law in Albuquerque (https://kufferlaw.com/) to seek clarification on their individual circumstances prior to entering into a cohabitation agreement.

In conclusion, cohabitation can be a practical living arrangement for unmarried people who want to save money, split chores or benefit from additional income, but it is essential that the agreement is entered into for the right reasons and that both parties are clear on their responsibilities and expectations. Otherwise one party or the other will find themselves severely disadvantaged should the relationship fail. For personalized legal advice, please contact the Law Office of Dorene A. Kuffer today.


[1] https://trustandwill.com/learn/cohabitation-agreement
[2] https://www.lawdepot.com/right-of-survivorship/#:~:text=Joint%20tenants%20with%20the%20right%20of%20survivorship%20are%20two%20or,have%20no%20right%20of%20survivorship.