By Tim Cox, Partner
Changes to the meaning of ‘PPS Lease’ are likely to reduce the administrative burden the Personal Property Securities Act 2009 (Cth) (PPSA) has on businesses involved in leasing or bailing goods. Once the proposed Personal Property Securities Amendment (PPS Lease) Act 2017 (Cth) receives Royal Assent, businesses will only be required to register their security interest on the Personal Property Securities Register (PPS Register) if the lease or bailment is for a period of two (2) or more years (increased from one (1) year), or for an indefinite term (provided that the lessee has substantially uninterrupted possession of the goods for a period of at least two (2) years), in order to protect their priority position. Any leases or bailment arrangements that fall outside this definition will not need to be registered to be adequately protected.
However, if the lease or bailment arrangement has an option to renew which will bring the total term of the lease or bailment arrangement to two (2) or more years, registration on the PPS Register will still be required Further, such a lease or bailment arrangement will need to be registered regardless of whether the option to renew is actually exercised.
Importantly, the previous regime will continue to apply to leases or bailment arrangements entered into prior to the date these amendments come into force.
If you would like assistance or tailored advice on the proposed amendments to the PPSA, please do not hesitate to contact: