Australia: PPS and leasing – the simplified version

Last Updated: 9 May 2014
Article by Steve Aitchison

Most Read Contributor in Australia, September 2016

There are a lot of people in the real estate industry struggling to understand what PPS is all about and how and why it is relevant to leases of real estate. Well here is a simplified explanation.


"PPS" stands for Personal Property Securities and "PPSA" is the Personal Property Securities Act. The purpose of the Act is to enable parties to protect their "security interests" in personal property. Personal property covers just about any kind of property you can think of, whether it is used for business purposes or for personal or domestic purposes, but not real estate. That's because security interests over real estate are protected by way of mortgages registered at the Titles Office. Personal property can include cars, boats, aircraft, livestock, crops, bank accounts, investments and other financial property, and intellectual property such as trade marks and designs. We'll refer to this kind of property as "goods" to avoid confusion with real estate.

There are basically three kinds of "security interests" that can be protected under the Act:

  1. a traditional security interest, which is where the owner of goods grants rights over the goods to secure payment of money or other obligations by a third party. For example, a bank might lend money to a manufacturer and take a "security interest" in the machinery owned by the manufacturer;
  2. a "retention of title" type arrangement. For example, a party supplies goods to a person on the basis that ownership in the goods remains with the supplier until the buyer has finished paying for the goods. In that case the supplier has what is known as a "purchase money security interest" in the goods for the amount of the unpaid purchase price. This form of interest is often referred to by the acronym "PMSI"; and
  3. an arrangement where a party has possession of goods, which belong to someone else, under a lease, consignment or bailment arrangement. This is knows as a "PPS Lease". Examples are where a hire company leases equipment to a construction company or where an artist has artwork on consignment with an art gallery. This is very different to a traditional "security interest" because it is in fact the owner that has a security interest in its own goods. This is where the Act can apply - where goods are leased in conjunction with real estate. We'll explain that in a moment.

Now, if a security interest is not protected (the Act uses the term "perfected") then a third party dealing with those goods is not bound by that unprotected interest. The most common way to protect a security interest is to register it on the new PPS Register. This can be done online, 24/7. Fees are payable – it is not expensive but fees vary depending on the length of registration. The following information is needed to register a security interest:

  • the name of the grantor – in most cases this is the owner of the goods;
  • the name of the secured party – in most cases this is the party that has the security interest;
  • a general description of the goods (or it can be an interest over all the assets owned by the grantor now and in the future); and
  • an expiry date – ie the length of the registration.

If you want to know whether goods owned by a person or a company are subject to any security interests, you can do a "grantor search". You go onto the online PPS Register and input the name of the person or company and a report is provided as to what, if any, security interests are registered against that person or company, with a description of the goods that are covered by that security interest.

There is a limited range of goods that can be registered by their serial number only – motor vehicles, aircraft and trade marks are examples – and in that case you search by serial number and not by "grantor".

PPS Leases

Now, let's get back to how the new PPS regime can affect leasing of real estate.

If a lease of premises for a term of 12 months or more (including renewals) includes commercial goods belonging to the landlord – ie goods which are not fixtures (because fixtures are part of the real estate) – then there is a "PPS Lease" with respect to those goods, between the landlord and the tenant. But, unlike most traditional security interests, in this case the tenant is the "grantor", not the owner. The owner is the "secured party".

Why is there such a thing as a PPS Lease? Why does the owner of goods have to register a "security interest" in goods they own? The answer is that it is the only way a landlord can protect its property if the tenant becomes insolvent. Section 267 of the Act provides that if party that has possession of goods under a PPS Lease (ie a commercial tenant) becomes insolvent, and the owner of the goods (i.e. the landlord) has not registered a PPS Lease, then the goods are, in effect, deemed to belong to the insolvent party. This means that the creditors of the insolvent party get the benefit of the goods and not the owner! Section 269 does entitle the owner to compensation for the lost goods, but this is cold comfort where the tenant is insolvent.

A recent case in the Supreme Court of NSW is exactly on point. In Albarran (as recs and mgrs of Maiden Civil (P&E) v Queensland Excavation Services Pty Ltd [2013] NSWSC 852, QES leased two Caterpillar excavation machines to Maiden. As owner of the equipment, QES was entitled to register a PPS Lease but did not. Maiden was placed in receivership. QES was unable to recover the machinery – it was, in effect, deemed to be the property of the lessee and the receiver was free to sell the machines and pay the proceeds to the secured creditor. The owner lost its machinery and received nothing from the sale proceeds.

Important things to know about registration

  1. Where there are two or more security interests registered over the same goods, priority is determined by time of registration – ie earlier registration has priority over later registration. But PPS Leases (and PMSIs) are special – if registered within time, they leap frog ahead of any other existing registrations. So for example, if a tenant has already granted a security interest to its bankers over all its existing and future assets, instead of the tenant's bank having priority over the landlord in relation to the landlord's own goods, the landlord's interest gets priority even though it was registered later in time. But in order to obtain this special priority, a PPS Lease must be registered within 15 business days of the tenant obtaining possession of the goods. This usually occurs on commencement of the lease but can occur earlier if, for example, the tenant has early occupation under a fitout licence and the landlord is paying for goods being delivered during that fitout period.
  2. If the tenant assigns its lease, a new party takes possession of the goods – ie the assignee. It is therefore necessary for the landlord to register a new PPS Lease (because there is a new grantor – ie the assignee) within 15 business days of the assignment taking effect.
  3. If the tenant sub-leases the premises, the sub-tenant takes possession of the goods. However, if the landlord is not a party to the sub-lease it may not be able to register a PPS Lease. But the original tenant may be able to, because the tenant is in fact leasing the goods (by way of a sub-lease) to the sub-tenant.
  4. When describing the goods in the registration, it is not necessary to itemise all the goods. In fact, in some cases that might not even be possible at the time of registration. It would be sufficient to refer, for example, to "the Landlord's Goods as described in the Lease between ## and ## dated ## in relation to premises situated at ##".

Fitout contributions

Landlord's fitout contributions are not, per se, protectable by registration. Very often a large part of a fitout contribution will be spent on modifications to the base building and/or fixtures, which automatically become part of the freehold. Remember, the Act does not apply to real estate, which includes fixtures. However, to the extent that the landlord's contribution is spent on goods – for example loose furniture and equipment – and the lease is clear that the landlord retains ownership in these items, they can be protected by registering a PPS Lease.

Is it all really worth it?

This is a commercial judgement to be made by the landlord on a case by case basis. Does the value of the goods warrant the administrative burden of registration, re-registration on assignment and removal of the registration on expiry of the lease? Bear in mind that the value of the goods may diminish over the term of the lease, or the "salvage" value may be much lower that the original cost.

Cash deposits and Bank Guarantees

A quick word about security deposits and Bank Guarantees. A cash deposit – whether held by the landlord or in joint names – still belongs to the tenant. It is held as security for performance by the tenant under the lease. Therefore, the landlord has a security interest (this is a traditional form of security interest, not a PPS Lease) which can and should be registered. However, it will rank behind any pre-existing security interest that the tenant may already have granted, such as an all assets charge in favour of its bankers. There are also circumstances in which the bank with whom the deposit is held could have priority over the money in the account, if the tenant owes money to the bank.

As a result of the new Act, security deposits now involve additional administration requirements and come with additional risks.

A Bank Guarantee, on the other hand, does not belong to the tenant – it is a direct agreement by the bank to pay the landlord a specified amount of money on demand. There are no PPS implications. Bank Guarantees are now widely regarded as the most preferable form of lease security.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.