On 11 May 2017, the Australian Parliament passed the Personal Property Securities Amendment (PPS Leases) Bill 2017 which makes changes to the definition of a “PPS Lease” under the Personal Property Securities Act 2009 (PPSA). The changes came into effect on 20 May 2017 and only apply to leases or bailments that are entered on or after 20 May 2017.
Under the old definition, the definition of a PPS Lease included certain leases and bailments of goods for an indefinite period or for a period of more than one year. This meant that leases or bailments that were for an indefinite period or for a period of more than one year were considered PPS Leases. The interests of the lessors and bailors under these PPS Leases were deemed to be security interests capable of registration on the Personal Property Securities Register (PPSR).
Under the new definition, leases or bailments entered into on or after 20 May 2017 will not need to be registered on the PPSR unless it is for a fixed period of more than two years. Leases or bailments for an indefinite term will no longer automatically fall within the definition of a PPS Lease and will not need to be registered on the PPSR unless and until it runs for more than two years.
As noted above, the changes do not operate retrospectively and do not effect any current PPS leases or bailments that were entered into prior to these changes. This means that all leases and bailments entered into before 20 May 2017 that have either an indefinite term or a term of more than one year must still be registered on the PPSR.
If you hire, rent or lease out goods these changes may affect you. The changes have been introduced to benefit those lessors and bailors that operate on short term or indefinite term leases that are unlikely to exceed a period of two years. If however, it is highly likely that the term will exceed two years lessors and bailors should still register their interest on the PPSR.
Should you have any questions or require further information about these changes our experienced team of PPSR specialists would be more than happy to discuss or assist you with your enquiries.