Further to our Alert on 3 March 2017, the new definition of ‘PPS Lease’ under the Personal Property Securities Act 2009 (PPSA) came into effect on 20 May 2017.
What are the changes?
The minimum term for a PPS Lease has changed so that:
- a lease or bailment must now have a term of more than 2 years (including option terms) to be a PPS Lease; and
- if a lease or bailment has an indefinite term it will not be a PPS Lease unless it continues for more than 2 years.
What agreements are affected?
The new definition will only apply to an agreement for lease or bailment of goods entered into on or after 20 May 2017.
Agreements entered into before 20 May 2017 will not be affected.
What is the impact of the changes?
If you have a lease or bailment agreement with a term of 2 years or less, it will not be a PPS Lease and you are no longer required to register it.
If you have a lease or bailment agreement for an indefinite term, it will not be a PPS Lease unless it continues for more than 2 years. If you have reasonable grounds to believe your lease or bailment agreement will continue beyond 2 years, you should register.
Who needs to be aware of this change?
Any person that operates or is involved in the operation of a business that rents, hires or leases goods should be aware of the change to the meaning of “PPS Lease”.
The change will prevent short term hire arrangements from being caught by the PPS regime and hopefully reduce the administrative burden for business in the equipment hire industry.
If you are unsure of what this change may mean for your business, or if you would like to discuss further, please contact HopgoodGanim Lawyers’ Finance team.