We are now well into Q4 of FY2015/16. As we take stock and prepare for the new year, it is time to review our Properties Securities (PPS) policies and procedures, especially if we have not done so recently.

Let us consider 2 of the recent legislative changes in the PPS space. The first relates to the deeming provisions in the PPS Act_¹, and the second relates to the definition of motor vehicles. 

1. Deeming provisions in the PPS Act.

The PPS Act deems certain arrangements to be security interests, including a “PPS lease” which a lease for 90 days or more of goods described by serial number (principally, motor vehicles, watercraft and aircraft). A security interest in these goods needs to be separately registered by reference to their serial number, otherwise the secured party's interest could be being extinguished when the property is sold or leased to a third party.

The PPS Deregulation Act² commenced on 1 October 2015. From this date, regardless of the type of goods leased, only leases for more than 12 months or indefinite terms are deemed to be security interests. Leases of less than 12 months are only caught as a security interest if they “in substance” secure payment or performance of an obligation. This means the number of transactions giving rise to a security interest should reduce.

A practice tip - some lease arrangements, such as finance leases, will constitute an “in substance” security interest regardless of the term of the arrangement. Despite changes introduced by the PPS Deregulatory Act, they should be registered on the PPS Register so as to protect the owner's interests.

2. The definition of motor vehicles.

The second change in PPS legislation relates to the definition of motor vehicles. From 1 July 2014, property that otherwise qualifies as a “motor vehicle” in the PPS Regulation³ will only be considered a “motor vehicle” for the purposes of the PPS Act if it is also capable of travelling at a speed of at least 10km/h, and has one or more motors with a total power greater than 200 watts. Previously, “motor vehicle” needed only to satisfy either of these tests. 
By combining the two tests, the Government anticipates that fewer “motor vehicles” will be caught by the provisions relating to registration of serial numbered goods. 

Importantly, the effect of this definition change is that “motor vehicle” registrations before 1 July 2014 will no longer perfect a security interest in collateral that has ceased to be a “motor vehicle”. 

A practice tip - if you have an existing registration over “motor vehicles”, you may need to supplement it with a further registration over the “Other Goods” collateral class. This “Other Goods” registration could cover leases of property that is no longer a “motor vehicle” starting on 1 July 2014.

Recently we held a webinar on the recent changes to the PPS Act and Regulations.

In this webinar, Karen Lee from Legal Know-How talked about: 

• Recent legislative changes to PPS law, in particular, what constitutes a PPS lease, and the definition of “motor vehicle”
• Practice tips to help you manage these changes

Download and listen to our webinar recording and find out why it is important to review your PPS policies and procedures.

^{1) Personal Property Securities Act 2009 (Cth)
2) Personal Property Securities Amendment (Deregulatory Measures) Act 2015 (Cth)
3) Personal Property Securities Regulations 2010 (Cth)}