Unmarried cohabitants, whether of the same or opposite sex, often share household expenses. They may purchase a home, cottage, furniture, household appliances, or car, and finance these transactions through a bank, credit union, or finance company. They may also share the use of the same credit card. Questions may subsequently arise as to who is responsible for any outstanding loan or debt after the cohabitants separate.
When loans are obtained from financial institutions, they are reduced to writing and signed by the party or parties legally responsible for the loan. For example, if unmarried cohabitants co-sign a promissory note to finance the purchase of a car, either or both of them can be called upon to discharge the obligation to the creditor. Not surprisingly, financial institutions are likely to look to the person who is better able to pay, even though they can sue either or both of the parties who signed the note. Liability on a mortgage will also be determined by the signature or signatures on the mortgage document.
When property or services are paid for by credit card, the owner of the card is liable to pay for the goods or services rendered. If an unmarried cohabitant applies for an additional card for his or her partner, the applicant is liable to pay all charges against that card. The important factor is not who uses the credit card but whose name is on the account. The same principle applies to unmarried cohabitants and to married...