PPSR – Protecting Your Interests When Hiring Out Equipment

If your business hires out equipment – whether it’s machinery, vehicles, tools, or other real assets – it’s critical to understand your rights and obligations under the Personal Property Securities Register (PPSR). Failing to properly register your interest can leave your business exposed to unnecessary financial and legal risk.

What is the PPSR?

The PPSR is a national online register that records security interests in property – including goods and equipment. It is designed to define who owns assets and help protect businesses if customers default, go into liquidation, or attempt to sell encumbered assets.

Why it Matters for Equipment Hire

When you hire out equipment, you don’t automatically retain ownership rights unless your interest is registered on the PPSR. If you fail to register, and your customer becomes insolvent or sells the equipment without your permission, your business could be treated as an unsecured creditor, losing rights to the equipment with little or no recourse.

Key Considerations:

1. Register Your Security Interest Early
For hire or lease agreements of more than two years (or with an option to extend beyond two years), your interest must be registered on the PPSR to be protected. Registration should be completed before your customer takes possession.

2. Clear and Compliant Documentation
Your hire agreements should clearly outline ownership of the equipment, the terms of use, and your rights in the event of non-payment or insolvency. Ensure all documentation complies with the Personal Property Securities Act (PPSA) requirements.

3. Know the Risks of Not Registering
If your interest is not registered:
• You may not recover your equipment in the event of the hirer’s insolvency.
• The equipment could be sold by the hirer, and the buyer may obtain clear title.
• You may be treated as an unsecured creditor, limiting your ability to recover losses.

4. Regularly Review Your PPSR Registrations
Keep your registrations up to date and accurate. Incorrect or expired registrations may be deemed invalid, exposing your business to unnecessary risk.

5. Seek Professional Advice
The PPSR and the relevant PPSA compliance terms can be tricky to understand and navigate. It may be worthwhile consulting with your trusted advisors to ensure you’re compliant and not at unnecessary risk.

Additionally – when purchasing equipment from a private vendor, it is important to do a search for the particular asset on the PPSR to ensure no financier or any other unrelated party has an existing security over the asset.

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