- 1Many businesses lease equipment, from smaller items such as photocopiers, to expensive and complex products such as cranes and earth movers. Equipment leasing is a specialist legal area, so it’s important to work with a lawyer with expertise in the field.
- 2There are two main forms of equipment leasing arrangements: an operating lease; and a finance lease/hire purchase arrangement. An operating lease arrangement enables the lessee to lease the equipment for a set period of time before returning it. A finance lease/hire purchase arrangement either requires, or gives the lessee the opportunity, to purchase the equipment when the lease expires.
- 3One of the most important issues when leasing equipment is determining which party will be liable to pay for damages to the equipment. It’s vital that the clause relating to repairs is drafted in a way which makes it absolutely clear which party is responsible. That party will then usually purchase insurance to manage the risk.
- 4An equipment lease may be a security interest for the purposes of the Personal Property Securities Act 2009 (Cth). If so, it should be registered with the federal government’s Personal Property Securities Register (PPSR). Registration will give the lessor protection, for example in the event the lessee becomes insolvent.
- 5A specialised leasing lawyer will be able to determine whether your lease covers all the areas that should be addressed or whether there are significant gaps. A leasing lawyer will also advise you on whether the terms are market-standard or unusual and unfair.
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Equipment Leasing in Australia
Acquiring, repairing and replacing equipment can be costly for your business.
Leasing equipment provides an alternative to paying for the equipment upfront in full, offering financial relief for cash-strapped businesses. If an equipment lease is a security interest for the purposes of the Personal Properties Securities Act 2009 (Cth) (PPSA), it should be registered on the Federal Government’s Personal Properties Securities Register (PPSR).
LegalVision’s banking and finance team can assist your business with:
- drafting, reviewing and negotiating equipment leases and hire purchase agreements;
- providing advice on the PPSA;
- completing registrations and undertaking searches of the PPSR on your behalf; and
- advising on structured asset finance.
Whether you intend to return or purchase the asset at the expiration of the lease may determine what type of lease agreement you require. Our specialist asset finance lawyers have assisted businesses of all sizes and dealt with a broad range of assets including aircrafts, ships, yellow goods, FPSOs and motor vehicles. LegalVision’s specialised knowledge and extensive experience enable us to document leasing transactions of all complexities.
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