As of the 1st October 2015 leases and bailments of ‘serial numbered goods’ (motor vehicles, water craft and air craft) for a term of less than 1 year, entered into after 1 October 2015, no longer have to be registered on the Personal Property Securities Register (“PPSR”).
‘Hooray!’, I hear you say? Thinking that finally these pencil pushers in Canberra are making some good decisions? Well it’s a step in the right direction but don’t get too excited as you’re not out of the clear yet.
- Leases or bailments of serial numbered goods and other goods for more than a year will still need to be registered on the PPSR.
- A Lease that is “in substance” a security interest and secures payment or performance of an obligation such as a finance lease or hire/purchase lease, regardless of its term and whether it is a PPS Lease or not, still need to be registered. A lot of people forget about these types of leases.
- The term of the PPS Lease is determined according to the length of time the goods are actually leased not the term nominated in the lease. If, for example, the lease says it is for a term of 6 months but in actual fact the goods are leased for more than a year the lease will constitute a PPS Lease and should be registered.
- Leases that have no definite term, such as month to month leases or leases that are ongoing until a party gives notice, are PPS Leases and must be registered. This applies even if, for example, the lease is only for a week!
By now you should have identified any PPSA exposures in your business and reviewed your internal processes to ensure you are PPSA compliant.