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Commercial Leases and the Personal Property Securities Act (PPSA)

If you’re a landlord of commercial property and your lessee goes bankrupt, or into liquidation, without the right protections, some of your assets could end up being used to pay their creditors.

Under the Personal Property Securities Act (PPSA), if an entity becomes bankrupt or goes into liquidation or voluntary administration, then an asset which is only held by that entity as a lessee, may be deemed to be an asset of the insolvent entity. 

Most often this applies to assets such as furniture, fitout, machines and other plant and equipment which are not considered as "fixtures" under the terms of the lease.

This is unless the lease is registered on the Personal Property Securities Register (or PPSR).

You can protect your assets by registering them on the Personal Property Securities Register (PPAR). Registration is a cost effective online process, well worth your time to protect your assets.

If you require assistance with this or you have questions about any other aspect of commercial leasing or the PPSA, then please don’t hesitate to call Marochydore based solicitors, Argon Law.

More Information

Did you know that if you’re a landlord of commercial property and your lessee goes bankrupt, or into liquidation, without the right protections, you could lose some of your assets to pay their creditors?

It is important to be aware of the impact that the Personal Property Securities Act (or PPSA) can have on the security of your investment. It can be easy to think that the PPSA doesn’t apply to you, but this can be a big mistake.

Under the PPSA, if an entity becomes bankrupt or goes into liquidation or voluntary administration, then an asset which is only held by that entity as a lessee, may be deemed to be an asset of the insolvent entity unless the lease is registered on the Personal Property Securities Register (or PPSR).

The PPSA doesn’t apply to interests in land or fixtures to land. But many leases of commercial or retail property also include furniture, fitout, machines and other plant and equipment. These assets belong to the landlord, but are not classified as fixtures.

If the tenant under such a lease becomes insolvent, you might find that the liquidator of the tenant is entitled to sell the fitout or the plant and equipment and distribute the proceeds amongst all of the tenant’s creditors. When this happens, the landlord doesn’t just loose a tenant and suffer all the problems that go with replacing them, but lose their assets as well.

Avoid having salt rubbed into your wounds when your tenant goes bust by registering your leases on the PPSR.

Registration on the PPSR is a cost effective online process, well worth your time to protect your assets.

If we can help you with this or you have any questions about any other aspect of commercial leasing or the PPSA, then please contact us on 07 5443 9988 or [email protected].

Argon Law is a Sunshine Coast law firm based in Maroochydore.  We are commercial lawyers and property and body corporate lawyers and are eager to assist you in any way we can.

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