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Property settlement agreements

Information about when and how you can make an agreement to divide your property after separation.

Property, debt and financial resources

A property settlement can deal with all types of property, debts, and certain financial resources.

For more information, see Property, debt, and financial resources.

Who can make an agreement

You and your ex-partner can negotiate a property or maintenance agreement through the Family law process if you were married or in a de facto relationship. The process is the same regardless of what type of relationship you were in.

If you weren’t married to, or in a de facto relationship with, your ex-partner, you may still be able to apply for property orders if you can show you were in a close personal relationship. This is a different process that occurs under NSW law.

For more information, see Who can make a property or maintenance agreement.

Types of agreements

If you and your ex-partner can agree on how to divide your property, you don’t have to go to mediation or court. You can:

  • make an informal agreement.
  • make a binding financial agreement, or
  • apply for consent orders.

If you want to transfer the title of a property or split superannuation, you must make a binding financial agreement or apply for consent orders. 

Informal agreement

An informal agreement can include a verbal or written agreement. There are no rules for making an informal agreement. It can be as detailed or as simple as you like. If you make an informal agreement, you should put it in writing. This will help avoid misunderstandings and disputes about the terms of your agreement.

You don’t go to court for an informal agreement. For this reason, your agreement won’t be legally enforceable.

You may want to make an informal agreement where the legal costs of making an agreement are greater than the total value of your assets.

Risks of informal agreements

There are some risks that come with making informal agreements, including:

  • the agreement isn’t legally enforceable
  • your relationship may not remain amicable – this often occurs when one person re-partners
  • you or your ex-partner, or your child, may develop health problems
  • your financial circumstances may improve while your ex-partners circumstances deteriorate.

Case study

Peter and Sally have separated after 5 years together. Peter is a labourer on the local council and earns $80,000 per year. Sally is a full-time photography student and part-time receptionist at a medical centre, where she earns $33,000 per year. In her spare time, Sally also runs a wedding photography business.

Until their separation, Peter and Sally were living together in a rental property. Peter has since moved out and Sally has stayed in the property. They don’t have any children.

Recently, the parties bought two cars, both of which are in Peter’s name. Both cars were bought with separate loans under Peter’s name. Peter has been paying the loan for the car he has been driving. Sally has been paying the loan for the car she has been driving.

Peter also owns two motorbikes, a boat and a caravan. Sally owns a camera and other photography equipment. She also has $50,000 in savings, which she inherited from her grandfather. Both parties have $5,000 in shares in their own names. Peter has $76,000 in superannuation. Sally has $20,000 in superannuation.

The parties want to avoid the costs of mediation and court, so they have made an informal agreement:

  • they will each keep their superannuation and shares
  • Peter will transfer the registration of Sally’s car into her name
  • Peter will transfer the loan for Sally’s car into Sally’s name
  • Peter will keep his car and continuing paying the loan
  • Peter will keep his motorbikes, boat and caravan
  • Sally will keep her photography equipment, and savings
  • they will split any household furniture and appliances.

Binding financial agreement

A binding financial agreement (BFA) is an agreement that sets out how you and your ex-partner will divide your property after separation. It is also known as a pre-nuptial agreement or cohabitation agreement.

You can make a BFA before, during or after your relationship.

You don’t go to court for a BFA. However, a BFA is legally enforceable.

Making a BFA can be more expensive than obtaining court orders. There is usually a higher costs because of the very specific and detailed legal advice.

Consent orders

Consent orders are court orders that reflect the agreement between you and your ex-partner about property and maintenance. They are legally binding just like orders made by a Judge after a contested hearing.

You can apply to the Federal Circuit and Family Court of Australia or Local Court of NSW for consent orders.

Before you can apply for consent orders, you must fulfil your duty of financial disclosure.

Obtaining consent orders is usually cheaper than making a BFA.

Consent orders are also more difficult to change than a BFA. This is because consent orders are meant to finalise your property and maintenance matter so that you don’t come back to court. There are only limited circumstances where you can apply to the court to change the orders. You should get legal advice before you apply for consent orders.

For more information, see Property and Financial Agreements and Consent Orders – What You Need To Know on the Attorney-General’s Department website.

Issues affecting your property settlement

When you are negotiating a property settlement there are a number of issues you may need to consider, including:

  • borrowing capacity
  • transfer duty
  • capital gains tax
  • bankruptcy.

For more information, see Issues affecting your property settlement.

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