Binding Financial Agreements vs Consent Orders: Which Is Best for Your Property Settlement?

Lauren Lydeamore

LawyerAitken PartnersView Profile

When a relationship ends, reaching an agreement about how property and financial assets will be divided is only part of the process. To ensure the agreement is legally recognised and enforceable, it must be properly formalised.

In Australia, separated couples can generally formalise their property settlement in one of two ways either by entering into a Binding Financial Agreement (BFA) or by applying to the Court for Consent Orders. Both options allow parties to record an agreed property settlement without the need for contested court proceedings and when prepared correctly, are legally binding and enforceable.

Understanding the difference between a Binding Financial Agreement and Consent Orders is important when formalising a property settlement after separation or divorce. While both options can create a legally binding agreement, they differ in terms of court involvement, legal requirements, flexibility and enforceability.

Key differences

Court Involvement: Consent Orders vs Binding Financial Agreements

When you make Application to the Court for Consent Orders, you must file the application together with a Minute of Proposed Orders. The Orders are reviewed by the Court and if approved, become legally binding Court Orders.

In contrast, a Binding Financial Agreement (BFA) is a private agreement between the parties and does not require court involvement or approval. Each party however must engage a solicitor to sign a certificate attached to the BFA confirming that the requisite legal advice has been provided prior to signing.

When Can a Binding Financial Agreement or Consent Order Be Made?

A BFA can be entered into:

• Before a relationship commences;
• During a relationship; or
• After a relationship has ended.

Where a BFA is entered into before or during a relationship, it can provide certainty regarding how property will be dealt with if the relationship later breaks down. BFAs entered into after separation can also provide an effective means of resolving property matters, provided both parties are willing to cooperate and reach an agreement as to the effect of the agreement and its terms.

Consent Orders are only entered into after the breakdown of the relationship.

Do You Need a Lawyer for a BFA or Consent Order?

For a BFA to be legally binding, each party must obtain independent legal advice about the effect of the agreement and its advantages and disadvantages before signing. A signed certificate from the legal practitioner who provided that advice must be annexed to the BFA, confirming that the advice required by the Family Law Act 1975 (Cth) has been given.

Consent Orders, on the other hand, do not require the parties to obtain legal representation.

Parties may prepare and file Consent Orders themselves, although legal advice is recommended to ensure the proposed orders are appropriate and enforceable, as well as Just and Equitable so that they can be accepted by the Court.

How Are BFAs and Consent Orders Structured?

BFAs can be described as a private contract between the parties. BFAs do not have a prescribed format and can be tailored to suit the parties’ individual circumstances, provided that the BFA complies with the requirements of the Family Law Act 1975 (Cth). Consent Orders are also tailored to the parties’ circumstances but generally follow a more structured format to meet the Court’s requirements and facilitate acceptance by the Court.

Can a Binding Financial Agreement or Consent Order Be Set Aside?

Both BFAs and Consent Orders can, in certain circumstances, be set aside by the Court. However, how BFAs and Consent Orders can be set aside are legislated in separate sections of the Family Law Act.

BFAs can be set aside for reasons such as non-disclosure, fraud, duress, undue influence, unconscionable conduct, impracticability, or failure to meet strict technical requirements.

Consent Orders can also be set aside by establishing grounds such as:

• A miscarriage of justice arising from fraud, false evidence or the suppression of evidence or any other circumstance;
• A significant change in circumstances that renders the orders (or part of the orders) impracticable to carry out;
• Where exceptional circumstances relating to the care, welfare and development of a child have arisen since the order was made, such that the child or their carer would suffer hardship if the order remained unchanged; or
• Where the making of a proceeds of crime order affects the property of one or both parties.

Summary

Both Binding Financial Agreements (BFAs) and Consent Orders can be effective ways of formalising a property settlement following separation. While a BFA offers flexibility and privacy, Consent Orders provide the benefit of court approval. The most appropriate option will depend on your individual circumstances, the complexity of your asset pool, and your long-term objectives.

Obtaining legal advice before entering into either a Binding Financial Agreement or Consent Orders can help ensure your agreement is legally binding, enforceable and tailored to your needs.

If you or someone you know requires assistance with a Binding Financial Agreement, Consent Orders or property settlement matters generally, please contact our Family Law team at Aitken Partners on (03) 8600 6000.