Division of Property, Finances and Debt
There are four ways a property settlement can be made by separating married or de facto couples:
- Informal Agreement
- Consent Court Orders
- Binding Financial Agreements
- Court Orders after a contested Court Hearing
Informal Agreements
Often known as a “kitchen-table deal” these are agreements when former spouses agree between themselves how to divide their property.
While we would always encourage you and your former spouse to work things out between yourselves it is important to realise there may be serious consequences if you do not have a legally binding agreement (such as Consent Orders):
- Enforcement: an informal agreement is unenforceable. This means if your former spouse does not follow through with their side of the agreement you may need to commence proceedings in the Family Law Courts to seek property adjustment Orders.
- Tax: where one spouse intends to retain the former family home they will not receive the exemption from paying stamp duty on the share of the property being transferred to them without a legally binding settlement.
- Uncertainty: without a legally binding property settlement there is nothing to prevent your former spouse from commencing proceedings for property adjustment Orders in the Family Law Courts.
Consent Orders
Most property settlements are finalised by Consent Orders. Whether you and your former spouse have engaged lawyers to negotiate a property settlement, you have engaged in mediation or come to an informal agreement the next step to finalise your property settlement is through Consent Orders filed in the Family Law Courts.
The process involves the completion of an Application for Consent Orders, the preparation of a set of Consent Orders setting out the agreement reached and the payment of a filing fee. The documents are then filed in the Family Court of Australia where they will be reviewed by a Registrar of the Court. In most cases you will not be required to attend the Court in order for Consent Orders to be made.
Once the Registrar has considered the Consent Orders and is satisfied that the property settlement is fair, the Orders will be made and returned to the parties with the seal of the Family Court of Australia affixed.
It is then up to the parties, usually with the assistance of their Family Lawyers to complete the process of complying with the Consent Orders such as transferring property and dividing superannuation.
A significant benefit of Consent Orders is that an independent and impartial Registrar of the Family Court of Australia will consider the property settlement before making the Orders to ensure that the agreement reached is fair in the circumstances.
Consent Orders may also be used to finalise active proceedings which have already been commenced in the Family Law Courts.
Legal advice should always be sought before signing Consent Orders as they are legally binding and carry with them serious legal consequences.
Binding Financial Agreements
Binding Financial Agreements are similar to Consent Orders in that they are a document reflecting the agreement reached by separating spouses. The difference being that they are not filed with the Family Court of Australia and are not required to be fair and equitable as Consent Orders are.
There are particular requirements which must be met in order for Binding Financial Agreements to be valid. Furthermore, as a result of a number of decisions in the Appeals Courts the reliability of Binding Financial Agreements is somewhat questionable. For these reasons we do not encourage clients to finalise their property settlements using Binding Financial Agreements.
If you are considering entering into a Binding Financial Agreement you should consult an experienced Accredited Specialist Family Lawyer before doing so.
Court Orders after a contested Court Hearing
Whilst the Local Court has limited jurisdiction to hear property cases most property disputes will be heard in the Federal Circuit Court of Australia before a Judge. Where there are particular complex issues to be determined the case may be heard in the Family Court of Australia before a Justice.
Once a decision has been made a set of Orders and Rason for Judgement will be delivered by the Judge or Justice hearing the case.
Court Orders after a contested Court hearing are legally binding and serious consequences flow form contraventions (or breaches) of them.