The Personal Property Securities Amendment (PPS Leases) Bill 2017 was passed by Parliament on 11 May 2017 and will become the Personal Property Securities Amendment (PPS Leases) Act 2017 (the Act), which will commence operation on the day after it receives Royal Assent. It is anticipated that this will occur within the next few days.
In summary, the Act amends the minimum duration of PPS leases from more than one year, to more than two years, and provides that leases of an indefinite term will not be deemed to be PPS leases unless and until they run for a period of more than two years.
This means that if, following the Act’s commencement, a party enters into a lease or bailment for two years or less (including any options to renew), the party will no longer need to register its interest on the Personal Property Securities Register (PPSR) as the agreement will not be a PPS Lease. However, if the agreement is for two years or less, but exceeds the agreed term, a party will need to register its interest on the PPSR before the agreement extends beyond two years.
Similarly, in respect of leases or bailments for an indefinite term, the agreements will not be PPS Leases until they have run for a period of more than two years.
Existing PPS Lease arrangements
The Act will only apply to leases and bailments entered into after the Act comes into effect (that is, after the Royal Assent). For leases and bailments entered into prior to the changes taking effect, the old definition of PPS Leases will apply. This means that until the Act receives Royal Asset, leases and bailments that run for a period of more than one year should be registered on the PPSR.
Watch this space for confirmation that the Act has received Royal Assent.