Don’t Let Romance Cloud Your Judgment

They say nothing kills the romance faster than getting mixed up in a financial dispute. Or, if they don’t say that, they really should. As a collection law practice, we don’t just represent companies with outstanding invoices. Regularly, individuals come to us with requests to collect debts of a more personal nature. We are going to cover making personal loans next week on the blog, but for now, let’s talk about love. 

When Money Mixes with Love

Of course, if you love someone, you will do anything to help them out. This may include helping them cover their share of the bills, making a personal loan, or even buying expensive gifts (like cars, jewelry, or clothes). In our law practice, we have seen financial “gifts” of these sorts create some pretty nasty disputes if the relationship falls apart. That’s why it is so important to be clear in romantic relationships when money gets involved.

Understanding the Difference Between a Loan and a Gift

In the Commonwealth of Virginia, there is no legal recourse for giving a gift and then wanting it back after the relationship ends. At its core, it’s really about the definition of a “gift.” When anyone gives a gift to another, it is necessarily without the expectation of anything in return. That’s what makes it a gift, rather than a transaction. Because gift-giving isn’t transactive, there is no way to get the gift back if things don’t go as you expect. However, not all offerings of financial support, or even material objects like cars and jewelry, are gifts inside a romantic relationship. 

If one person gives another a check for $1,000, saying, “Here’s some money to help with your bills, just pay me back when you can,” the law sees that as a loan, not as a gift. That’s because both parties understand, at the time the money is handed over, that the funds will be repaid. Of course, this kind of verbal agreement isn’t as easy to enforce as something written, but that doesn’t mean the person who made the loan has no recourse. 

Another classic example of a transaction, as opposed to a gift, is the presentation of an engagement ring. When an engagement ring is offered, it is usually accompanied by the spoken, “Will you marry me?” If the proposed-to person accepts the ring, it is seen (in the not-so-romantic eyes of the law) as one end of a transaction. The other end of the transaction -- the marriage part -- is assumed. If the ring-accepter later decides not to marry the proposer, the proposer may be entitled to ask for the ring back. Of course, not all people do want the ring back after a broken engagement. However, there is plenty of legal precedent to support requiring the ring be returned if the engagement is broken. Sure, it may seem a little antiquated to think of marriage in these transactive terms, but that’s the law. 

Clarity is Key...Especially in Writing

Now that we understand the difference between a gift and a transaction, it is important that this understanding is made clear at the time the money or property is given. Both parties need to be crystal clear on whether the thing of value is being given as a gift or with the expectation that the loan will be repaid or something else will be offered in return. 

Having a conversation about this is great, but it won’t always be enough. Instead, we highly recommend writing down the terms of the agreement and having all parties sign. We know, this is not the most romantic thing to do, and it may seem like it creates mistrust in the relationship, but it doesn’t have to cause conflict. If you and your boyfriend or girlfriend are talking about making some kind of financial investment in one another, be clear. First, clarify whether the offer is a gift or not. If it’s not, solidify the terms. Something like, “I appreciate you loaning me $1,000 to cover bills this month. I promise to pay you back in four $250 installments over the next four months.” Then, simply write that agreement down, whether on the back of an envelope, in an email, even in a text message. Have the other person confirm their agreement, either by signing or by responding with a text saying, “Yep, that sounds good.” 

When Things Go Wrong

We have all been there, sometimes relationships just don’t work out. For one reason or another, romantic relationships may end. Very often, these partings can occur amicably and without any prolonged nastiness. However, as a law firm, we often see the very worst between a couple after they break up. By following our recommendations above -- being clear about whether an offering is a gift or a transaction and specifying how any loans are to be repaid -- hopefully you can avoid the need to get a lawyer involved at all. But, things just aren’t always that neat. If a relationship has ended and you feel that you are owed financial repayment for a loan or purchase of something like a car, clothing, or jewelry, you may be able to use the legal system to support you. Of course, having an agreement in writing is the easiest possible way to enforce a loan that was made within a romantic relationship. However, if you don’t have that, you may still be able to enforce your verbal agreement. Look through emails and past text messages for conversations about the loan. Did the other person acknowledge that they owed you money? Did they make any promises of repayment that they didn’t keep? Written acknowledgements of the debt like this may be useful in enforcing repayment of the debt.

At Wakefield Law, we don’t relish the messiness that can come at the end of a relationship. That’s why we always advise our clients to either 1) keep money out of romance or 2) be clear and write things down. However, things just aren’t always that neat. If you are in a dispute with a former romantic partner over a debt that is owed to you, we may be able to help. Give our office a call at 703-771-9740.