Consent Order vs Binding Financial Agreement – which is best for my property settlement?

10 November
Divorce, Property Settlement, Separation

If you are going through a separation or divorce and need to divide assets with your ex-partner, you may have come across the terms ‘Consent Order’ or ‘Binding Financial Agreement’. In short, they are the two ways that you can choose to finalise your property settlement agreement in the event of a relationship breakdown.

If you have come to an agreement with your ex-partner on how you wish to divide your assets and liabilities, you can make your agreement legally binding through a sealed Consent Order or Binding Financial Agreement. Without formalising your agreement, your ex-partner may make a claim against you down the track.

You can read more about what each of these agreements are in our earlier article, “Legally binding property settlement without going to Court”.

There are important differences between the two options, as well as pros and cons.

**Please note, the below advantages and disadvantages are general, and one option may be better for your specific circumstances.

Property settlement Consent Order – advantages and disadvantages

Consent Orders are one method to legally formalise property settlement and can be obtained from the Federal Circuit and Family Court of Australia. It includes the parties listing all assets, liabilities and superannuation. Your lawyer will assist you in preparing an Application for Consent Orders and a Consent Minute of Order to file in the Court.

Advantages

- As the Orders are enforced by the Family Courts, there are only very limited circumstances in which they can be set aside (overturned) later.
- Consent Orders can deal with property settlement and parenting arrangements simultaneously to create legally binding orders for both.
- The division of property must be ‘just and equitable’ (or ‘fair’) and Consent Orders will not be approved by the Courts if they do not achieve a just and equitable outcome. When assessing if the Orders are just and equitable, the Court will look to the contributions of each party to the property pool (such as financial, non-financial and parenting/homemaker contributions) and any relevant future factors such as age, health or ability to earn income.
- While it is recommended that both parties obtain legal advice, this is not a mandatory requirement.

Disadvantages

- As the application needs to be filed with the Family Courts, a filing fee is payable (or can be waived if you have a valid concession card). You will also need to wait for a court hearing to have your Orders made (which can take up to 4-8 weeks).
- There are time limits to issue proceedings for Consent Orders with the Family Courts. Married couples have a 1-year limit from the date of divorce, and de facto couples have a 2-year limit from the date of separation.

You can read more about relevant time limits in our earlier article, “Time Limits for Divorce and Property Settlement”.

Binding Financial Agreement – advantages and disadvantages

Instead of Consent Orders, you and your former partner may wish to enter into a private legal agreement called a Binding Financial Agreement (‘BFA’). This agreement will determine how property and financial resources will be dealt with after a breakdown in the relationship.

Advantages

- The agreement does not require the Family Court’s approval and is a private binding contract between the parties setting out the terms of their agreement.
- If you and your ex-partner have reached an agreement that would not be considered ‘just and equitable’ by the Courts, the agreement can still be reflected in the Binding Financial Agreement.
- You may be able to resolve the issue of spousal maintenance and restrict your ex-partner’s ability to make an application for spousal maintenance in this agreement. You can read more about this in our earlier article, “What is Spousal Maintenance?”.

Disadvantages

- As Binding Financial Agreements are not filed with the Family Courts, they will only be reviewed if a dispute arises and you or your ex-partner apply to the Court to make the agreement enforceable. The Court may set aside the Binding Financial Agreement and declare it invalid for numerous reasons (e.g. if it was not drafted correctly).
- A BFA can only deal with the division of property and cannot make parenting arrangements binding.
- Each party must have their own lawyer and receive independent legal advice. Without each party obtaining a Certificate of Independent Legal Advice, the agreement will not be enforceable.
- A BFA can be much more expensive than Consent Orders.

How can a family lawyer help?

Family Law Resolutions have an expert team of family lawyers who can assist with Consent Orders or Binding Financial Agreements. We can help you analyse the pros and cons of both options in order to reach a decision on what is best for your specific and unique needs.

If you would like to discuss your situation in more detail, you can book a free no obligation phone consultation with one of our lawyers. We assist separated couples across Australia with all aspects of separation and family law.