Common property usually gets divided whenever a marriage or de facto relationship dissolves. It leads to a simple division of household objects; for instance, one person takes the refrigerator, and the other takes the big-screen TV. Separated partners who can readily agree on an asset split rarely formalise their agreement. In that instance, each side goes away confident that the other will not seek their assets in the future.
Property Consent orders or a BFA (binding financial agreement) are the two options for settling financial concerns with your ex-partner.
Both papers are legally binding, but one may be more appropriate than the other, depending on your circumstances. Because informal agreements about asset split frequently fail, it is critical to conclude matters in a legally enforceable manner.
We’ve seen unfortunate cases where a spouse has filed a court application more than 20 years after a handshake asset division—requesting a different and larger settlement because of unsolved and unfinalised financial matters.
What is a Binding Financial Agreement?
A BFA (Binding Financial Agreement) is a unique contract between two people. It is a private agreement that does not require Australia’s Federal Circuit and Family Court approval. A BFA, on the other hand, is only legally binding and established under the Family Law Act 1975 (Cth) (except for de facto couples in Western Australia, where the Family Court Act 1997 applies). Ironically, only if the parties construct a BFA under the wording of this legislation would the agreement be exempt from the Family Law Act and Family Court Act’s property division procedures.
A couple can create a BFA at any point in their relationship. A BFA is usually a prenuptial agreement, a legally binding financial arrangement that a couple makes before they marry or begin living together as a de facto couple. A prenuptial agreement can benefit a marriage by providing assurance and stability.
What are Property Consent Orders in Family Court?
The Federal Circuit and Family Court orders of Australia are known as Property Consent Orders. These orders are drafted and agreed upon by the parties themselves, usually through conversations between their solicitors, despite the Court making them.
The parties submit a draught copy of their financial agreement to the Court and ask that it be legally binding. In case there is a future breach of the orders, the Court has the authority to enforce them.
The Court decides whether the Property Consent Orders are “fair and equitable” under the Family Law Act 1975 or 1997 before issuing the orders (WA). As soon as the Court gives these orders, they become legally binding. They can, however, be set aside in certain circumstances.
What Makes The Two Documents Different?
BFAs and Property Consent Orders are used by divorcing couples to achieve the same fundamental goal: a legally binding financial split. Despite their same aim, the instruments are vastly different. Although each is superior to the other, there are some situations where one is the better option. Below are the main distinctions between the two instruments:
- Independent Legal Advice
Property Consent Orders are reviewed by court authorities to verify that they are equitable and enforceable. The Court will reject an unjust agreement, providing a safety net for litigants without legal assistance. Property Consent Orders are therefore less expensive than BFAs, which require both parties to get independent legal advice. However, because the Court would not approve consent orders with major technical flaws, the parties should have them drafted by an experienced family law practitioner.
- Ability To Enforce
Because the Court grants Consent Orders, if one of the parties fails to comply, the Court will automatically enforce the agreement. It is different from a BFA in that you must file a lawsuit to execute the contract. Although the outcome is likely to be the same, waiting for the Court to determine that the BFA is binding can be stressful. If the Court considers the BFA to be invalid, it has the option of refusing to enforce it.
A BFA provides significantly more flexibility than Consent Orders because it is a private contract. Even if the Court would not consider the subject fit for inclusion in Property Consent Orders, a BFA has the option to add any matter that is essential to the former spouse. Non-derogatory terms, for example, could be included in a BFA to prevent ex-partners from publicly criticising each other.
Both BFAs and Consent Orders call for “full and frank disclosure” of each party’s financial information. Essentially, the parties cannot agree on a property split unless they know each other’s income and assets. The BFA differs from Consent Orders in that the parties do not need to go through discovery to confirm the accuracy of their disclosures. That is, they are not required to document their financial claims. As a result, if one or both parties have complicated financial arrangements, a BFA lets that party avoid the added labour and expense of discovery.
Should I Get a Binding Financial Agreement (BFA) or Go With Consent Orders?
Whether you should use a BFA or consent orders in your property settlement depends on what you want to achieve and prevent.
In general, a BFA is the best choice if:
- Both sides consent to a financial division that isn’t fair and equitable;
- The parties value privacy and the parties want to include spousal maintenance.
- Other issues that aren’t typically addressed in Consent Orders.
Consent Orders are typically the best option when:
- The parties have simple financial arrangements;
- They want to strike a fair agreement;
- keep legal fees to a minimum.
If you’re thinking about making a BFA or a Property Consent Order, go to Platinum Lawyers, a competent law firm. You can contact the experts at Platinum Lawyers for our experienced help.
You may have numerous doubts and questions, and our staff at Platinum Lawyers will be available to assist you at any moment. If you have any will-related or other legal difficulties in Sydney or Parramatta, call (02) 8084 2764.