From today, 1 October 2015, the Personal Property Securities Act will no longer operate to automatically give rise to a security interest in serialised goods (e.g. motor vehicles, motorhomes, aircrafts etc.) that are leased or bailed for a term of less than 12 months.
This is in contrast to the now outdated law which provided that leases or bailments of serialised goods for a period of more than 90 days, automatically created a security interest in the goods in favour of the lessor or the bailor. This meant that a lessor or bailor had to register a security interest on the Personal Property Securities Register (Register) to protect their interest in the goods.
For lessors or bailors wanting to protect their interest in serialised goods, the Register is no longer automatically available as a protective measure simply because the lease or bailment is for a period of 90-364 days.
A significant upside to this reform is the likely reduction in operating costs of small to medium businesses. No longer is it necessary to carry out the registration process where serialised goods are leased or bailed for less than 12 months.
Importantly, this amendment will not operate retrospectively, meaning that any lease or bailment of serialised goods for more than 90 days that was entered into prior to 1 October 2015, will still give rise to a security interest which must be registered on the Register in order to properly protect the interest.
If you would like us to review your equipment lease or bailment documents or assist you with using the Register, please contact: