A more relaxed approach to short-term leases
Owners of assets are often confused about how to register a lease to third parties, under the Personal Property Securities Act 2009 (PPSA).
The legislation previously required any lease of a serial numbered good with a term greater than 90 days (or renewable for a total period of 90 days or more) to be registered in order to protect the good’s owner in the event of the person holding the good (lessee) becomes subject to an insolvency appointment.
The PPSA has been amended to lift the registration requirements on a lease of goods with a serial number, such as; motor vehicles, caravans, forklifts, and watercraft, so that they will not require registration where the lease term is less than 12 months. Importantly however, the amendments only apply to transactions entered into after 1 October 2015.
For leases of such goods for a term of greater than 12 months (or a lease capable of renewal beyond a 12-month term) registration is still required.
The amendment is intended to protect businesses that hire goods where it is generally not expected that the hire will be for a period greater than 12 months.
These amendments are effective from 1 October 2015.
Accountants and solicitors giving clients PPSA advice should ensure their clients fully understand and appreciate the implications of not registering their assets on the Personal Property Security Register (PPSR) where their goods are in the hands of third parties.
Worrells offers complimentary in-house workshop training specifically on the PPSA. If you are interested in having a PPSA Worrells Workshop at your office for your staff, contact your local Worrells office, or email firstname.lastname@example.org.