Publications / Projects and Infrastructure
WHO SHOULD READ THIS
- Service providers, contractors and equipment hire businesses who engage in short term hires should take note of these changes.
THINGS YOU NEED TO KNOW
- From 1 October 2015, new leases or bailments of serial numbered goods will generally only require registration if longer than one year (previously 90 days).
WHAT YOU NEED TO DO
- Review your registration processes for security interests in respect of leasing, hire and bailment agreements.
As noted in our Focus on 2 July 2015, the Personal Property Securities Amendment (Deregulatory Measures) Act removes the provision that deemed leases of serial numbered goods for 90 days or more to be security interests. The commencement date of those changes has now been confirmed as 1 October 2015.
Previously, the Personal Property Securities Act 2009 (PPSA) deemed leases or bailments (for value) of serial numbered goods (e.g. vehicles, excavators, loaders etc) for a term of 90 days or more to be security interests and therefore requiring registration on the Personal Property Securities Register (PPSR).
From 1 October 2015, hires and bailments for a term of less than 12 months will generally not be considered a security interest. Leases or bailments for less than 12 months will only give rise to a security interest and require registration if they “in substance” secure payment or performance of obligations.
It is important to note that these changes are not retrospective. Security interests for leases or bailments of serial numbered goods for a term of more than 90 days entered into before 1 October 2015 should still be registered.
Companies should also take note that leases or bailments (for value) that are for a term of more than one year, are for an indefinite term, are for a term of up to one year that are renewable, or in substance secure payment or performance of obligations (such as finance leases), should still be registered on the PPSR.
Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication