This page explains why lenders ask, how the two documents differ in the ways that matter to a lender, and what to ask your lender before you choose. It is general information, not legal advice. For the full detail on each document, see Consent Orders — the full FAQ and Binding Financial Agreements — the full FAQ.
Why the bank is asking
When one of you is keeping the home, the lender is being asked to do two things: lend to one person alone, and usually release the other from the loan. Before it does that, a lender will usually want to see a document showing that:
- the property settlement between you is final, so your former partner cannot later claim a share of the home
- the person keeping the home will own it (or is entitled to have it transferred to them)
- the amount being paid out to the other person, if any, is fixed.
An informal agreement, an email or a statutory declaration does not do that. A BFA and sealed consent orders both can.
Some lenders and brokers say “a BFA” loosely, to mean any formal property settlement. Before you pay for either document, ask the lender exactly which one it will accept (see “What to ask your lender” below).
What each document is
Consent orders are orders made by a court on terms the two of you have agreed. You apply together by filing an application and your proposed orders. A registrar reads them, and makes the orders only if satisfied that they are just and equitable. Once made, they are court orders, the same as orders a judge makes after a hearing. The court then seals them (stamps them as official). Usually you do not need to go to court, and neither of you is required by law to have a lawyer, although the court recommends independent advice.
A binding financial agreement is a private contract between the two of you about how your property and finances are divided. It is not filed with or approved by a court. It binds you only if the formal steps in the Family Law Act 1975 (Cth) are followed. The most important is that each of you gets independent legal advice from your own lawyer before signing, and each lawyer signs a statement that the advice was given. So a BFA always involves two lawyers. A BFA can be made before or during a relationship as well as after it ends. This page is about one made after separation.
In Western Australia
If you both live in WA, consent orders are made by the Family Court of Western Australia, whether you were married or de facto. Married couples in WA make a BFA under the Family Law Act, like everyone else. WA de facto couples make one under WA's Family Court Act 1997, which has its own formal steps: each lawyer's certificate goes in an annexure to the agreement, and after signing, the original goes to one of you and a copy to the other. So if your lender asks to see the original, only one of you will have it. A superannuation split for a WA de facto couple is still made under the Family Law Act. If one of you lives in another state, get advice about which court and which law apply.
The differences that matter to a lender
| Consent orders | Binding financial agreement | |
|---|---|---|
| What it is | Court orders, sealed by the court | A private contract between the two of you |
| Who checks it | A registrar, who must be satisfied the orders are just and equitable | No court check. The law requires each of you to have independent legal advice before signing |
| Lawyers | Not legally required for either of you | One for each of you, by law |
| Superannuation split | Yes, by a court order. The fund must be given notice before the application is filed | Yes, by a superannuation agreement inside the BFA, which takes effect when served on the fund |
| Stamp duty on the transfer of the home in WA | Nominal duty | Nominal duty, but you must also show the relationship has ended |
| Time limit | 12 months after a divorce order takes effect, or 2 years after a de facto relationship ends. After that, you can still apply if you both consent | No time limit for making one |
| Setting it aside | Only on limited grounds, such as fraud, duress or failure to disclose. A court has already checked it | On limited grounds too, such as fraud or unconscionable conduct. It is also not binding if the formal advice steps were not done properly |
| Court fee | Yes, for the application | None |
Neither document takes your name off the mortgage. The loan is a contract with the lender, and the lender is not a party to your orders or your agreement. The person leaving the loan is released only when the lender agrees, usually when the person keeping the home refinances in their own name. Until then, you both stay liable to the lender. See Property transfer after settlement.
Court approval against private agreement
The biggest practical difference is who has looked at the deal. Consent orders have passed a court's check that the division is just and equitable. A BFA has had no court check. Instead, it depends on each of you having had independent legal advice and on every formal step being done correctly. Some lenders are more comfortable with a court order for that reason. Others accept a properly made BFA.
Superannuation
Both documents can split superannuation. In consent orders, the split is a court order, and the fund must be told about the proposed orders at least 28 days before the application is filed. In a BFA, the split is a superannuation agreement that forms part of the BFA, and it takes effect once a copy is served on the fund with the required documents. Either way, the fund moves the money, not the lender. See Super splits explained.
Stamp duty
In Western Australia, a transfer of the home between separating partners can attract only nominal duty whether it is made under court orders or under a financial agreement. The court order or agreement itself is exempt. Three things to know:
- If you rely on a financial agreement rather than a court order, RevenueWA asks for evidence that the relationship has ended.
- For WA de facto couples, the relationship must meet the Family Court Act's tests (for example, it lasted at least two years).
- If someone else goes on the title, for example a parent who joins the new loan, ordinary duty is charged on the share they receive.
If the home has already been transferred and full duty was paid, RevenueWA can reassess the duty at the nominal rate if the orders or agreement come into existence within 12 months of the transfer. Get advice before transferring the home ahead of a formal settlement: until then, the person giving up their share has no protection.
Other states have their own rules. Ask your conveyancer or settlement agent before the transfer.
Setting it aside
Neither document is beyond challenge, and both can be set aside only on limited grounds. Consent orders can be set aside for a miscarriage of justice (for example fraud, duress, or a failure to disclose relevant information), if they become impracticable to carry out, or in a few other narrow situations. A BFA can be set aside for fraud (including not disclosing something material), if it is void or unenforceable under the ordinary law of contracts, for unconscionable conduct, or in a few other narrow situations. A BFA can also fail because the formal advice steps were not followed. See When a BFA can be set aside.
The best protection in either case is the same: full and honest disclosure of everything you both own and owe.
Which one usually fits a refinance
For most separated couples who have agreed that one of them will keep the home and refinance, consent orders are the usual choice. They are a court order, which lenders and settlement agents deal with every day. They can include a superannuation split and orders about the mortgage, such as a deadline to refinance and what happens if the refinance does not go through. And the law does not require either of you to have a lawyer.
A BFA may suit you better if:
- your agreed division is one a court might not accept as just and equitable, and you both still want it
- you want the arrangement kept private, out of the court's records
- your lender specifically asks for a BFA and will not accept consent orders.
If you are past the time limit, you can still apply for consent orders if you both consent to the application going ahead late.
What to ask your lender
Before you pay for either document, ask your lender or broker:
- Exactly which document do you need: sealed consent orders, a BFA, or will either do?
- Do you need the final sealed orders or signed agreement, or can you give pre-approval on a draft?
- If it is a BFA, do you need copies of both lawyers' signed statements about the advice?
- Does the document need to name this loan, this property or the payout amount?
- When does my pre-approval expire, and can it be extended?
- Will you release my former partner from the loan when I refinance?
Write down the answers, and give them to your lawyer before anything is drafted.
How long it takes
For consent orders, most of the time is before lodgement: gathering documents, agreeing the wording, both of you signing, and giving any superannuation fund its notice. Once lodged, orders are typically made in about two and a half weeks, though it can extend to about four weeks depending on how busy the court is at that time of year. For a BFA, there is no court step, but nothing is binding until both of you have had your own legal advice and signed.
Either way, tell your lawyer about the lender's deadline at the start, and keep your broker updated. Pre-approval for the refinance can often be arranged while the documents are being prepared.
When to get advice
Get legal advice before you sign anything, and especially if:
- you are not sure the division is fair to you
- your former partner has a lawyer and you do not
- there is a trust, a business, a self-managed super fund or property overseas
- you are past the time limit and your former partner will not consent
- there has been family violence, or you feel pressured to agree.
How Lawcaptain can help
Lawcaptain prepares both documents for a fixed price.
- Consent orders: Essentials from $1,100 or Full Service from $2,750, plus fixed extras where your situation needs them. Use the instant price to see yours.
- Binding financial agreements: the Simple BFA is $1,500 for one person, and the Complex BFA is a custom quote from $2,500. Your former partner needs their own lawyer, whom they pay separately. Use the BFA instant quote.
A family lawyer reviews your matter. If, at your first meeting, you or the lawyer decide the service is not right for you, your fee is refunded in full, provided drafting has not started (conditions apply).
Common questions
My bank asked for a BFA. Will consent orders do instead?
Often, yes, but only the lender can tell you. Some lenders and brokers use “BFA” to mean any formal property settlement. Ask the lender which documents it accepts before you choose.
Does a BFA or consent orders take my former partner off the mortgage?
No. Only the lender can release someone from a loan, usually when the person keeping the home refinances in their own name. Your orders or agreement can set a deadline for the refinance and say what happens if it does not go through.
Do we both need lawyers?
For a BFA, yes: each of you must have independent legal advice from your own lawyer before signing. For consent orders, the law does not require either of you to have a lawyer, although the court recommends that you get advice.
Is there stamp duty on transferring the house?
In WA, a transfer under consent orders or a financial agreement between separating partners generally attracts only nominal duty, if the conditions are met. Other states have their own rules. Ask your conveyancer or settlement agent.
Can a BFA or consent orders split superannuation?
Yes. Consent orders split super by court order. A BFA splits it by a superannuation agreement that forms part of the BFA. In both cases the fund has to be served with the documents.
How long do consent orders take?
Most of the time is spent before lodgement, getting documents ready and signed. Once lodged, orders are typically made in about two and a half weeks, though it can extend to about four weeks depending on how busy the court is at that time of year.
Can we do this if we separated a long time ago?
Yes. A BFA has no time limit. Consent orders can be applied for after the time limit if you both consent to the application going ahead late.
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