A binding financial agreement is usually the better path if you and your former partner can agree on how to divide your assets. It typically costs a fraction of what court proceedings cost, takes weeks rather than months and keeps the final decision in your hands. Going to court is generally only necessary when agreement cannot be reached, when there are concerns about hidden assets or when a significant power imbalance makes private negotiation unsafe.
The choice between these two paths is one of the most important financial decisions you will make after separation.
A BFA is a private legal contract that allows both parties to set the terms of their property settlement without a judge being involved.
Court proceedings, on the other hand, can take 12 to 36 months, cost tens of thousands of dollars and leave the final decision in the hands of a judge who may not divide assets the way either party wants.
The right path depends on whether you and your former partner can cooperate, the complexity of your financial situation and how much time, money and stress you are willing to invest in the process.
This article breaks down both options in detail so you can make an informed choice about the best way to resolve your property settlement.
How Does a BFA Work for Property Settlement?
A binding financial agreement is a private legal contract made under the Family Law Act 1975 that sets out how a couple’s assets, liabilities and financial resources will be divided.
Unlike court orders, a BFA does not require a judge to review or approve the terms.
Instead, both parties negotiate the division of property between themselves, with each party obtaining independent legal advice from their own lawyer before signing.
For a BFA to be legally binding, it must comply with the requirements set out in section 90G of the Family Law Act.
Both parties must sign the agreement, and each party must receive independent legal advice about the effect of the agreement on their rights and the advantages and disadvantages of entering into it.
Each party’s lawyer must then provide a signed statement confirming that this advice was given, and a copy of that statement must be provided to the other party.
If these requirements are not met, the agreement may not be enforceable, which is why it is important to work with a lawyer who understands the strict compliance standards.
One of the key advantages of a BFA is that the parties themselves decide how property will be divided.
There is no requirement for the agreement to be “just and equitable” in the way that a court order must be.
This means that couples can agree to terms that suit their specific circumstances, even if those terms would not necessarily be what a court would order.
That flexibility is valuable in situations where one party wants to keep a particular asset, where business interests need to be protected or where the parties simply want to reach a resolution quickly and move on.
What Types of BFA Apply After Separation?
There are different categories of BFA depending on the stage of the relationship.
For couples who have already separated, the relevant provisions are section 90D of the Family Law Act for married couples who have obtained a divorce order, and section 90UD for de facto couples whose relationship has ended.
These post-separation BFAs function the same way as other types of binding financial agreements in terms of legal requirements.
Both parties still need independent legal advice, the agreement must be properly signed and the solicitor’s certificates must be completed correctly.
The main difference is simply the timing of when the agreement is made.
Couples who are separated but not yet divorced can also enter into a BFA under section 90C, which covers agreements made during a marriage.
This can be useful for couples who want to finalise their property settlement before their divorce order is granted, particularly given the strict time limits that apply once a divorce is finalised.
What Happens When You Go to Court for Property Settlement?
Going to court for property settlement means filing an application with the Federal Circuit and Family Court of Australia and having a judge decide how your assets and liabilities will be divided.
This path is typically used when the parties cannot reach an agreement between themselves, although it can also result in consent orders if an agreement is reached during the court process.
The court follows a four-step process established under the Family Law Act to determine the outcome.
First, it identifies and values all assets, liabilities and financial resources belonging to both parties.
Second, it assesses the contributions each party has made, including financial contributions, non-financial contributions and contributions as a homemaker or parent.
Third, it considers the future needs of each party, taking into account factors such as age, health, earning capacity, care of children and any other relevant circumstances.
Finally, the court steps back and looks at the overall result to determine whether the proposed division is just and equitable.
How Long Do Court Proceedings Typically Take?
Contested property settlement proceedings in the Federal Circuit and Family Court typically take between 12 and 36 months from the date of filing to a final hearing.
Simple matters that settle early through negotiation or a court-facilitated conciliation conference may be resolved within six to nine months.
Complex matters involving significant assets, business valuations, trust structures or disputes about contributions can extend well beyond two years.
Court backlogs also play a role, and the actual timeline often depends on which registry is handling the matter and how many cases are ahead of yours.
During this time, both parties are required to comply with court directions, which may include providing financial disclosure, attending mediation or conciliation conferences, obtaining valuations of property and businesses and preparing affidavit evidence.
Each of these steps adds time and cost to the process.
It is also worth noting that most property settlement matters filed in court do not actually proceed to a final hearing before a judge.
The majority settle at some point during the court process, often at a conciliation conference or through negotiations between lawyers.
This means that even if you file in court, there is a strong chance you will still end up negotiating a settlement rather than having a judge decide.
How Much Does Going to Court Cost?
The financial cost of court proceedings for property settlement is significant.
Court filing fees alone start at $435 for an initiating application seeking final financial orders, and increase to $585 if interim orders are also sought.
The responding party pays $435 to file a response.
Conciliation conference fees cost $490 per party, and if the matter proceeds to a final hearing, daily hearing fees apply on top of that.
Legal fees, however, make up the bulk of the cost.
The Federal Circuit and Family Court of Australia has noted that the average cost per person for a matter that proceeds to a final hearing is approximately $30,000.
Complex cases involving substantial property pools, businesses or multiple entities can exceed $100,000 per person in legal fees.
These costs include solicitor and barrister fees, the cost of obtaining valuations and expert reports, and the cost of preparing court documents and attending hearings.
By contrast, a BFA can often be completed for a fraction of these costs, particularly when the parties have already agreed on the terms of their settlement.
How Do These Two Paths Compare?
The differences between a BFA and going to court for property settlement are significant across several key factors.
Understanding the difference between a binding financial agreement and a consent order can help you determine which path is more appropriate for your circumstances.
The following table summarises the main points of comparison.
| Factor | Binding Financial Agreement | Going to Court |
|---|---|---|
| Court involvement | No court approval required | Judge reviews and decides or approves the outcome |
| Typical timeline | 4 to 8 weeks if both parties cooperate | 12 to 36 months for contested matters |
| Cost | Generally $2,000 to $5,000 per party | $5,000 to $100,000+ per party depending on complexity |
| Control over outcome | Both parties agree on the terms | Judge decides based on the four-step process |
| Privacy | Completely private, not filed with the court | Court proceedings are on the public record |
| Fairness requirement | No requirement for the terms to be just and equitable | Court must be satisfied the outcome is just and equitable |
| Spousal maintenance | Can finalise spousal maintenance claims | Consent orders cannot make a final spousal maintenance order |
| Enforceability risk | Can be set aside under section 90K if strict requirements not met | Very difficult to change once court orders are made |
| Independent legal advice | Mandatory for both parties | Recommended but not legally required |
The most important takeaway from this comparison is that a BFA gives the parties control, while court proceedings hand that control to a judge.
If you and your former partner can agree on how to divide your assets, a BFA is almost always the faster, cheaper and less stressful option.
If agreement is not possible, court proceedings may be the only way to achieve a resolution.
What Does This Look Like in Practice?
Consider a couple who separated after 10 years together with a combined asset pool worth $1.2 million, including a family home, two cars, superannuation and a small amount of savings.
In the first scenario, they are able to communicate and agree that one party will keep the home and the other will receive a larger share of the superannuation and a cash payment to equalise the split.
They each engage a lawyer, and the BFA is drafted, reviewed, signed and completed within six weeks.
Each party pays approximately $2,500 in legal fees, and the entire matter is resolved privately without any court involvement.
In the second scenario, the same couple cannot agree on the value of the home or how superannuation should be divided.
One party files an application with the Federal Circuit and Family Court.
Over the next 18 months, both parties are required to provide full financial disclosure, attend a conciliation conference and prepare affidavit evidence.
A property valuer is engaged to value the home, and a superannuation actuary provides a report on the super split.
By the time the matter settles at a conciliation conference (without ever reaching a final hearing), each party has spent approximately $35,000 in legal fees and disbursements.
The outcome in both scenarios may be similar in terms of the percentage split, but the cost, timeline and emotional toll are vastly different.
The first scenario took six weeks and cost $5,000 total.
The second took 18 months and cost $70,000 total.
When Is a BFA the Better Option?
A BFA is typically the better option when both parties are able to communicate and are willing to negotiate a fair outcome.
This is often the case when the relationship has ended amicably, when the asset pool is relatively straightforward or when both parties have a shared interest in avoiding the cost and delay of court proceedings.
Couples with business interests often prefer a BFA because it allows them to structure the division of assets in a way that protects the ongoing viability of the business.
A court, on the other hand, may order the sale of a business or a division of business assets that neither party would have chosen.
A BFA is also useful when privacy is a priority.
Court proceedings are on the public record, which means that financial details disclosed during the case may become accessible to others.
A BFA is a private contract between the parties and is not filed with any court, keeping financial matters confidential.
On top of that, a BFA can address spousal maintenance in a way that consent orders cannot.
Under the Family Law Act, consent orders do not make a final order in relation to spousal maintenance, meaning that a maintenance claim could potentially be made in the future.
A BFA, however, can include terms that finalise spousal maintenance obligations entirely.
When Is Going to Court the Better Option?
Going to court is the better option when the parties cannot reach an agreement, when there are concerns about non-disclosure of assets or when one party has been subjected to pressure, coercion or family violence that makes negotiation unsafe or unfair.
If your former partner is refusing to disclose their true financial position, court proceedings provide mechanisms to compel disclosure.
The court can issue subpoenas for financial records, order parties to produce documents and impose consequences for non-compliance with disclosure obligations.
These tools are not available in the BFA process, where financial disclosure is not a mandatory legal requirement in the way it is for consent orders.
Court proceedings are also appropriate when there is a significant power imbalance between the parties.
If one party is in a much stronger financial or emotional position, the structured process of the court, including access to independent family reports and conciliation conferences, can help ensure a fairer outcome.
The court’s requirement to reach a just and equitable result acts as a safeguard against one-sided arrangements that might occur in a privately negotiated BFA.
In cases involving complex trust structures, multiple business entities or international assets, the court’s power to make orders binding on third parties can also be an advantage.
A BFA is limited to the parties who sign it, whereas court orders can extend to companies, trustees and other entities that hold relevant assets.
What Are the Time Limits You Need to Know?
Strict time limits apply to property settlement in Australia regardless of which path you choose.
For married couples, you must either formalise your property settlement or file a court application within 12 months of the date your divorce order becomes final.
For de facto couples, the time limit is 24 months from the date of separation.
If you miss these deadlines, you will need to apply to the court for special permission to bring a claim out of time.
The court will only grant this permission if you can demonstrate that you would suffer hardship if your application were not allowed to proceed, and there is no guarantee that permission will be given.
This makes it critical to take action promptly after separation, regardless of whether you intend to pursue a BFA or go to court.
One advantage of the BFA process is that you can begin negotiating and drafting the agreement at any time, including before the divorce is finalised.
Court proceedings, on the other hand, require formal filings and adherence to the court’s timetable, which can create delays if you are approaching the deadline.
What Risks Should You Be Aware of With Each Path?
Both a BFA and court proceedings carry risks, and understanding those risks is important before committing to either path.
What Are the Risks of a BFA?
The primary risk with a BFA is that it can be set aside by a court under section 90K of the Family Law Act.
The grounds for setting aside a BFA include fraud, including non-disclosure of a material fact, that the agreement was entered into for the purpose of defrauding a creditor, that the agreement is void or unenforceable due to unconscionable conduct, duress or undue influence, or misrepresentation, that it has become impracticable to carry out the agreement or that there has been a significant change in circumstances relating to the care of a child that would cause hardship if the agreement were not set aside.
The risk of a BFA being set aside is higher than the risk of court orders being overturned, because court orders go through a judicial review process before they are made.
A BFA, by contrast, is a private agreement that only comes under judicial scrutiny if one party challenges it later.
This is why it is essential to ensure that a BFA is properly drafted by an experienced lawyer, that both parties provide full and frank disclosure of their financial circumstances and that neither party is placed under pressure to sign.
What Are the Risks of Going to Court?
The risks of court proceedings include the high cost, the lengthy timeline and the uncertainty of outcome.
Even with strong legal advice, it is difficult to predict exactly what a judge will decide, because every case turns on its specific facts and the judge’s assessment of the evidence.
There is also an emotional toll to consider.
Court proceedings are adversarial by nature, which can increase conflict between the parties and make it harder to maintain a cooperative relationship, particularly where children are involved.
The process of preparing affidavits, attending hearings and waiting for decisions can be draining over a period of 12 to 36 months.
Cost orders are another risk.
While each party typically pays their own legal costs in family law proceedings, the court can order one party to pay the other party’s costs in certain circumstances, such as where a party has unreasonably refused to negotiate, made false allegations or caused unnecessary delays.
What If You Start With One Path and Need to Switch?
It is possible to begin down one path and change course if circumstances require it.
For example, you might start negotiating a BFA but find that your former partner is unwilling to agree to fair terms or refuses to provide proper financial disclosure.
In that situation, you could file a court application to have the matter determined by a judge instead.
Going the other direction is also possible.
Many couples who file court applications end up reaching an agreement during the court process, which can then be formalised as consent orders or, in some cases, as a BFA.
In fact, the majority of property settlement matters filed in court settle before reaching a final hearing.
The key is not to delay taking action while you decide which path to pursue.
The time limits for property settlement apply regardless of which method you choose, and you do not want to run out of time while weighing your options.
Need Help Deciding Between a BFA and Going to Court?
A binding financial agreement offers a faster, more affordable and more private way to resolve property settlement when both parties can agree on the terms.
Court proceedings provide a structured process with judicial oversight for situations where agreement is not possible or where there are concerns about fairness, disclosure or safety.
The right choice depends on your specific circumstances, and getting the right legal advice early can save you significant time, money and stress.
As BFA lawyers in Australia, my law firm can help you understand your options and guide you through the process of preparing a binding financial agreement at a transparent, fixed fee.
Contact us today by calling 1300 529 888.
Frequently Asked Questions
Can a BFA and consent orders be used together?
A binding financial agreement and consent orders serve different purposes and are generally used as alternatives rather than together. You would typically choose one method to formalise your entire property settlement. However, in some situations, a BFA might address financial matters while consent orders deal with parenting arrangements, as BFAs cannot include parenting orders under the Family Law Act.
Does a BFA need to be fair to be enforceable?
A binding financial agreement does not need to meet the “just and equitable” standard that applies to court orders. The court will not set aside a BFA simply because the terms are unfair to one party. However, if the agreement was obtained through fraud, duress, unconscionable conduct or non-disclosure of material facts, it can be challenged and potentially set aside under section 90K of the Family Law Act.
What happens if my former partner refuses to sign a BFA?
If your former partner refuses to sign a binding financial agreement, you cannot force them to do so. A BFA requires the voluntary agreement of both parties. If agreement cannot be reached, you may need to consider other options such as mediation, negotiation through lawyers or filing an application with the Federal Circuit and Family Court to have the property settlement determined by a judge.
Can I switch from court proceedings to a BFA?
You can reach an agreement at any stage during court proceedings and choose to formalise it through either consent orders or a binding financial agreement. Many property settlement matters filed in court settle before reaching a final hearing. If both parties agree on terms, withdrawing the court application and entering into a BFA is a valid option, though consent orders are more commonly used at that stage.
How long does a BFA take compared to going to court?
A binding financial agreement can typically be completed within four to eight weeks when both parties cooperate and provide their financial information promptly. Court proceedings for contested property settlement matters generally take 12 to 36 months, depending on complexity, cooperation levels and court availability. Even matters that settle during court proceedings usually take several months to resolve.
Do both parties need their own lawyer for a BFA?
Yes, both parties must obtain independent legal advice from separate lawyers for a BFA to be legally binding under section 90G of the Family Law Act 1975. Each lawyer must provide a signed statement confirming that advice was given about the effect of the agreement on their client’s rights, and the advantages and disadvantages of entering into the agreement. Failing to meet this requirement can render the BFA unenforceable.