Who Is Responsible for a Lease in the Wife's Name in a Separation?

When you and your husband separate, you have to split not only your personal lives but also your finances. Achieving a true separation requires a distribution of the property and debt that each of you accumulated during the marriage. Courts usually distribute leases to the party in whose name they appear, but just because your name is on a lease doesn't mean you'll be solely responsible for it.

Characterization

A lease is a contract in which you receive the right to possess and enjoy an item of property for a given term -- be that a home or a car -- in exchange for a given payment. Leases therefore exhibit characteristics of both property and debt. As a general rule, courts will assign responsibility for the lease to whichever party possesses the property. If the apartment lease is in your name but your husband is living there, he'll almost always get stuck with the lease. If you're driving around in a car leased in his name, you'll almost always get stuck with that.

Leases as Property

Since leases usually involve a monthly payment, people tend to think of them more as debts than property. In some situations, though, a lease can be valuable. You may have a lease on an apartment for $1,000 a month in a city where the going rate for a place like yours is actually $1,500. If you subleased the apartment out for the remainder of your term, you'd net $500 per month. In such a case, the apartment lease in your name would be a property item worth $500 per month times the remainder of your lease term.

Leases as Debt

More often than not, a lease operates more like a debt. When your husband moves out of your home, you may not be able to afford the payments, nor may you be able to afford your leased car. The monthly payment is a continuing obligation, though, and if you incurred it during marriage it will probably be marital. Technically, each of you bears responsibility for half. As a practical matter, a court is unlikely to divide the balance due on your lease the same way as it would a credit card or personal loan because a continuing lease obligation comes with a continuing right to possess the property.

Default

Leases operate more like debts when you default. In most lease contracts, the lessor -- the landlord -- has the right to sue you for the remaining payments minus whatever he recovers by re-letting the property. This can amount to thousands of dollars. If you incurred the lease during marriage, the lessor's demand -- or judgment, if it goes that far -- will probably qualify as a marital debt no matter what state you live in. While a court will most likely distribute it to you, it will make your husband mathematically responsible for his half through greater responsibility for another marital debt or a smaller share of other marital property.

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