Consent Orders and BFAs are both legally binding methods to settle property matters when a relationship dissolves. However, their nature, creation, and enforceability differ.
What is a Financial Agreement?
A Binding Financial Agreement (BFA) is a private contract between two individuals that outlines how they will handle their property in the event of separation or divorce. It doesn’t require court approval but must be constructed under specific legal guidelines to be enforceable.
What is a Consent Order?
Consent Orders are agreements that are filed in a court. The court will only make orders if they believe the terms are fair and reasonable. They can cover both property and parenting matters.
Key Differences:
Court Involvement
Consent Orders: Filed in a court, the court will only make orders if they deem them “just and equitable,” meaning fair and reasonable.
BFAs: Essentially a contract between parties and doesn’t come under the scrutiny of a court or any independent body.
Fairness
Consent Orders: Must be fair and reasonable as a court will review them to ensure they are just and equitable.
BFAs: Terms don’t have to be fair. One party can have a more advantageous settlement.
Also read: Does Judge Reject Consent Order?
Legal Advice and Witnesses
Consent Orders: Parties can draft by themselves without a lawyer to witness.
BFAs: Both parties must have their own lawyer to provide independent legal advice.
Scope
Consent Orders: Can cover both financial/property and parenting matters.
BFAs: Only deal with financial or property matters.
Enforceability
Consent Orders: Enforced by the court through a simpler enforcement process.
BFAs: Enforceable only when an application to the court is made.
Consent Order vs Financial Agreement: Which is Better?
The choice between a Consent Order and a BFA depends on individual circumstances. Here are some specific scenarios to help you decide:
When to Choose a BFA:
Unequal Division: A BFA allows for such flexibility if a couple has mutually agreed upon a division that might seem unfair to outsiders—for instance, one party might keep a more significant portion of the assets due to various personal reasons.
Privacy Concerns: For couples who prefer to keep their financial matters private and away from the court’s scrutiny, a BFA offers a confidential way to settle property matters.
Complex Clauses: If there are unique clauses or conditions that the couple wants to include, which aren’t typically covered in Consent Orders, a BFA provides flexibility—for example, clauses related to future inheritances or specific periods.
When to Choose Consent Orders:
Simplicity: For couples with straightforward financial situations, without complex assets or debts, Consent Orders can be a more precise and direct approach.
Fairness: If both parties desire an equitable split and want the court to review and ensure the agreement’s fairness, Consent Orders are the way to go.
Combined Matters: For those looking to settle both property and parenting matters simultaneously, Consent Orders provide a comprehensive solution.
Cost Concerns: Drafting a BFA often requires both parties to seek independent legal advice, which can be costly. If minimizing legal fees is a priority, Consent Orders, especially in amicable separations, can be more cost-effective.
Enforceability: If there’s a concern about the future enforceability of the agreement, especially if one party might not uphold their end, Consent Orders have the court’s backing, making them more enforceable.
How We Can Provide Assistance: Consent Order vs Financial Agreement:
A construction manager approached us at Melbourne Family Lawyers as he was contemplating filing for divorce.
While he had some knowledge about both Consent Orders and BFAs, he was still determining which option would best suit his unique situation.
During our in-depth consultation with him, we explained the intricacies of both Consent Orders and BFAs.
We emphasized the significance of ensuring fairness when opting for Consent Orders and the inherent flexibility that BFAs offer.
Given the client’s intricate financial situation and preference for a more confidential agreement, we advised that a BFA would be the most appropriate choice.
To ensure the process was seamless and legally sound, we facilitated the provision of independent legal advice for both parties involved.
Subsequently, we meticulously drafted an agreement that was both fair and reflective of the client’s wishes, granting him the assurance he sought.
Always Seek Legal Advice
Whether you’re considering a Consent Order or a BFA, it’s crucial to understand their differences and implications.
Both offer ways to settle property matters, but their suitability depends on individual circumstances.
Regardless of the choice, seeking legal advice is paramount to ensure the agreement is fair, reasonable, and legally binding.
Remember, it’s not just about dividing assets; it’s about securing an equitable future.
Director of Melbourne Family Lawyers, Hayder manages the practice and oversees the running of all of the files in the practice. Hayder has an astute eye for case strategy and running particularly complex matters in the family law system.
