The introduction of the Personal Properties Securities Act (“PPSA”) in January 2012 created a new legal concept of the ‘PPS Lease’ in Australia.
Under the PPSA, a ‘PPS Lease’ is a lease or bailment of goods for an indefinite period or for a period of more than one year. However, for serial numbered goods (assets that may or must have a serial number including motor vehicles, boats and aircraft), the lease or bailment need only be for a term of 90 days or more to create a PPS Lease. All PPS Leases must be registered on the Personal Property Securities Register or the lessor’s interest in the goods may be “trumped” by other parties (such as liquidators or secured creditors).
On 19 March 2014, the Personal Property Securities Amendment (Deregulatory Measures) Bill 2014 (Cth) was introduced into the House of Representatives.
The intent of the Bill is to amend the PPSA so that leases of serial numbered goods for less than twelve months will no longer be deemed ‘PPS Leases’ for the purposes of the PPSA. The effect of the amendment will be to simplify the deeming provisions of the PPSA by removing section 13(1)(e) of the PPSA and minimising the need for small and medium hire businesses to register short-term leases (and to reduce the associated costs).
Importantly, the proposed changes to the PPSA will apply only to transactions entered into after enactment of the amendments.
Further amendments to the PPSA are expected to be proposed following an extensive review of the PPSA due to be completed by 31 January 2015.
If you have leased, loaned, or otherwise given custody of goods to a third party (whether or not those goods are identified by serial number) you may have created a PPS Lease. Failure to register the PPS Lease could result in you losing the right to reclaim those goods. Call us on (03) 8689 0016 if you have any questions about PPS Leases or the PPSA.