Finance equipment with security
Equipment finance turns on one thing: whether the interest in the equipment was registered.The equipment is what the business runs on, and somebody else paid for it. That arrangement works perfectly until an insolvency or a dispute makes someone ask who actually owns it. The answer comes off the Personal Property Securities Register rather than off the lease. A lessor who did not register can lose the equipment to the lessee’s liquidator. A lessee who did not read the end-of-term conditions can owe a residual nobody mentioned. We document the facility properly and register what needs registering, on whichever side of it you are.
Registered in time
The interest goes on the register in the correct form and within the limits that apply, which is what makes it hold.
No surprise at the end
The residual, the return conditions and any rollover are known before you sign rather than after.
The right structure
A lease, a chattel mortgage and hire purchase do different things, and you get told which one fits.
What is an equipment lease facility?
An equipment lease facility is an arrangement under which a lessor makes equipment available to a business. The business pays periodic rent to use it. Depending on how the lease is written, the business may have the right to buy the equipment at the end of the term. It may also owe a residual amount when the term ends.
The part that decides what happens under pressure is registration. A lessor’s ownership interest, or a lender’s security over the equipment, has to be registered on the Personal Property Securities Register. Without that, it is not enforceable against third parties, including a liquidator. Equipment that looks plainly owned by the finance company can fall into the lessee’s insolvent estate if nobody registered.
What happens to leased equipment if the business becomes insolvent?
If the lessor’s interest is registered on the Personal Property Securities Register, the lessor can generally recover the equipment from the insolvent estate. If it is not registered, the equipment may be treated as the insolvent company’s own property and shared among creditors. Registration is the only reliable protection.
Does a lender taking security over equipment have to register?
Yes. Under the Personal Property Securities Act a security interest over equipment has to be registered. That is what gives it priority over other creditors and lets it survive an insolvency. Registering late, or against the wrong entity, can defeat it entirely. We handle the registration as part of the transaction.
What is the difference between a lease and a chattel mortgage?
Under a lease the financier owns the equipment and you pay to use it. Under a chattel mortgage you own it from the start and the financier takes security over it. The difference changes who carries the asset, how it is treated for tax, and what happens at the end of the term.
What is a residual and should I worry about it?
A residual is the amount owing at the end of the term, and it is often a substantial one. It is set at the beginning rather than negotiated at the end. It is worth knowing the figure before you sign. The choices are usually to pay it, refinance it, or hand the equipment back on conditions.
Getting the structure right costs less than fixing it later
Tell us what equipment is being financed and who is on each side. We will tell you what has to be documented, what has to be registered, and what the end of the term looks like.
An unregistered security interest over equipment is no security at all
You are putting an equipment facility in place, or you already have one running. The equipment carries real value, either for your business or for your lending position. If the underlying interest is not documented and registered properly, that value can disappear the moment a competing claim is made. The gap between thinking you are protected and being protected is exactly where the disputes live.
- We will advise which facility structure suits the transaction.
- We will prepare the equipment lease or finance documentation.
- We will register the security interest in the correct form and in time.
- We will review existing documentation and tell you where the gaps are.
- We will explain the end-of-term obligations before you sign.
The business depends on equipment somebody else paid for
You need a piece of capital equipment: a truck, a machine, medical or specialist technology. A finance company or a private lender will fund the acquisition or lease it to you, and the commercial terms look fair. The documentation is dense, and nobody has explained what you owe at the end of the term. No one has confirmed that the lender’s interest is being registered correctly. You need the equipment now. You do not want to find the problem three years in, when it is too late to fix.
What's included in your equipment finance service
- Advice on lease, chattel mortgage or hire purchase structure.
- Equipment lease or finance documentation prepared.
- Security interest registered on the PPSR.
- Review of an existing lessor's or lender's documentation.
- End-of-term obligations explained and negotiated.
- Advice on damage, replacement and return conditions.
What goes wrong when equipment finance is under-documented?
A lessor who registers incorrectly finds out at the worst possible moment. The lessee’s business collapses, and the liquidator takes the equipment as an unencumbered asset of the estate. That is what the register says it is.
On the other side, a lessee who signed without understanding the end of the term can face a residual payment they had not budgeted for. Or return conditions the equipment cannot meet after three years of use, or an automatic rollover into another term. A business running on equipment under a lease it never fully read is in a much weaker position to manage those obligations. In both directions, fixing it afterwards costs more than getting it right would have.
How we make the facility hold
We look at the transaction before the documents are signed and tell you which structure actually suits it. A lease, a chattel mortgage and a hire purchase arrangement do different things to ownership, tax and what happens at the end.
We then prepare or review the documentation so the obligations on both sides are written down rather than assumed. That includes the residual, the return conditions, and what happens if the equipment is damaged or replaced. The security interest is registered in the correct form, against the correct entity, within the time limits that apply. And we explain in plain terms what has been signed, so the end of the term is not the first time anybody reads it.
How the facility comes together
Three steps from a quote to equipment you can rely on keeping.Pick the structure
We tell you whether a lease, a chattel mortgage or hire purchase suits the transaction, and what each one does at the end.
Paper and register
We prepare or review the documents and register the security interest in the correct form, against the correct entity, in time.
Take delivery
You proceed knowing what you owe through the term, what you owe at the end, and what protects the equipment if something changes.
Equipment you can rely on keeping
Equipment finance moves faster than almost any other kind. The quote is approved, the supplier has stock, and the machine is needed on site. The legal documents turn up as the last box to tick before delivery. That ordering is exactly backwards from where the risk sits.
We are ISO 9001 accredited. What gets checked on a finance file, and the time limits that apply to a registration, are defined rather than remembered. Registration deadlines are the sort of thing that only matter once, and by then it is too late to ask.
Our great lawyer guarantee
Six principles we hold to, whatever you bring us and however long it takes.
Take the time
We listen carefully to understand what you want to achieve, then step you through the advice and the documents.
Share our knowledge
We pass on as much as we can, so you can make your own informed decisions.
Stick to our knitting
We only do what we are good at, so you never pay for our learning.
Work as one team
Someone is always available to answer your question or point you the right way.
Fair pricing
A fixed or capped quote for advice and documents, so you do not carry the price risk.
It is your show
We are in it for a front row seat to witness your success, not for our egos.
Get the equipment facility documented properly
Tell us what equipment is being financed, who is funding it, and when it is needed. We will tell you which structure fits and what has to be registered before delivery.
More on this area of law
Read more about equipment finance, leasing and security registration.