Consent Orders or a Binding Financial Agreement?
Whether parties choose Consent Orders or a Binding Financial Agreement (BFA), the final outcome will be the same. Both processes are effective to make their agreement legal and enforceable.
Many parties and lawyers prefer to use consent orders because, in the process of obtaining the orders from the Court, there is a degree of involvement and supervision from the Court and, therefore, it is more likely that the process will be final and will not be challenged in the future.
The reality is that, whether parties choose to enter into consent orders or a private BFA, a final property settlement, once formalised legally is very rarely successfully challenged afterwards.
The process to make a property settlement legal
When parties reach an agreement to settle a family law property matter, it is important that they formalise the agreement legally, whether via consent orders or a BFA, for various reasons as described in some detail below.
To review the process required for parties to reach a settlement please see:
- To obtain legal advice a about the law and about their entitlements;
- to make full and frank disclosure of their finances to each other 1;
- steps to negotiate an agreement.
This article explains the two alternative processes available to parties to make their property settlement legal under the Family Law Act (Cth) 1975, i.e.:
- Whether to enter into Consent Orders; or
- To enter into a BFA.
These two alternative processes may be used by parties who are or have been married or in a de facto relationship, including a same sex relationship.
Using Consent Orders
To obtain consent orders from a court, the parties must file:
- An Application for Consent Orders; and
- Consent Orders.
The documents may be filed in the Federal Circuit and Family Court of Australia or any Local Court or Magistrates Court. The process is the same. There is no need for the parties to appear in Court. A registrar of the Court will read the documents and, if satisfied, will make the Orders for a property settlement in accordance with the Consent Orders filed and then mail them to the parties or their lawyers. The Orders may then be implemented.
The Application for Consent Orders is a lengthy document which parties sometime find overwhelming and too difficult to complete. The Application must include detailed information about the parties’ finances in order inform the registrar what the agreement is all about – see example at: https://www.fcfcoa.gov.au/fl/forms/app-consent-kit
For some tips about how to complete the form see our separate article: “How to Complete an Application for Consent Orders form”
The Consent Orders is a legal document which normally should be completed by an experienced lawyer to ensure that the orders are clear, precise, not open to misinterpretation and are capable to be implemented.
Before making the Consent orders, the Registrar must be satisfied that the agreement appears to be fair and equitable to both parties. If the registrar suspects that the agreement does not appear to be fair, he/she may raise questions (requisitions) about why the orders should be made.
A Binding Financial Agreement
An alternative method for parties to formalise a property settlement legally is to enter into a Binding Financial Agreement (BFA) under the provisions of the Family Law Act (Cth) 1975.A BFA is a private deed or a private contract that parties may enter into which does not need to be approved by a court.
There are various types of BFAs that parties may enter into under the Family Law Act (Cth) 1975 including BFAs to formalise property settlements after the breakdown of the parties’ marriage or relationship.
For a BFA to be valid, it must comply with certain formalities and each party must obtain independent legal advice from a solicitor and each solicitor must sign a statement to that effect. Normally, that statement or certificate from each solicitor is attached to the BFA itself.
The BFA should include operative clauses similar to what consent orders should cover, for example all the steps which parties must follow to transfer from one party to the other title to real property or shares or a motor vehicle or a portion of one party’s superannuation entitlements.
The BFA , as is the case when parties use consent orders as an alternative method to formalise a property settlement between them, is a legal document which should be completed by an experienced lawyer to ensure that its terms are clear, precise, not open to misinterpretation and are capable to be implemented.
Why should parties formalise their property settlement legally?
Quite often, parties are motivated to enter into consent orders or a BFA because that will attract an exemption to pay stamp duty in relation to the transfer of title to real property or shares or a motor vehicle. There are also capital gains tax benefits in formalising such a family law agreement legally.
However, the most important reason to enter into a legal agreement that reflects the overall agreement is to end the financial relationship between the parties in order that nether may bring an action in the future against the other under the Family Law Act (Cth) 1975.
The role of an experienced family law solicitor is to ensure that the process to make a property settlement legal goes smoothly, avoids questions or requisitions from a court and can easily be implemented.
The Elringtons Family Law Team has experienced family law solicitors who are available to speak with you about your family law matter and guide you through the family law process.
For more information, contact Carlos Turini
p: +61 2 6206 1300 | e: cturini@elringtons.com.au
- Parties have a legal “duty to make full and frank disclosure of all material facts, documents and other information relevant to the dispute” to the other party –Schedule 1, Pre‑action procedures, Part 1. 1 General (5)(i) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 – https://www.legislation.gov.au/Details/F2021L01197 ↩︎
