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.