LexisNexis Practical Guidance®

A lease is a right to exclusive possession of land. However, in everyday use it extends to the right to use an asset on specific terms. Such terms usually include the payment of some value, often described as "rent".

A lease is also in substance a finance contract.

This guidance note compares leases and bailment and sets out the key features and clauses of a lease.

See Lease terms.

Operating leases and finance leases are treated as consumer leases under the National Credit Code. Hire purchase agreements and chattel or goods mortgages are treated as loan agreements which are supported by a security interest.

This guidance note contrasts an operating lease with a finance lease and discusses the four products in terms of Australian accounting standards and the National Credit Code. This guidance note also discusses the introduction of accounting standard IFRS 16/AASB 16 and how it affects finance documents.

See Common types of asset finance products.

Finance leases, hire purchase agreements and chattel mortgages fall within the scope of the definition of “security interest” under the Personal Property Act 2009 (Cth) (PPSA). Operating leases can also fall within the scope of that definition but there will need to be consideration given to the terms of that lease.

This guidance note discusses how the PPSA applies to leases.

See Personal Property Securities Act and leasing.

Common examples of "big ticket" assets include aircraft, ships and rail assets. Other such assets include "yellow goods", other large valuable assets (or components of equipment) used in the mining industry, IT infrastructure server assets, pipelines, scaffolding and cranes used in the construction industry and premises fit-out.

This guidance note demonstrates the role of each participant in “big ticket” asset finance and sets out the common terms that are relevant to this area of practice.

See “Big ticket” asset finance.

This guidance note addresses the key lease terms that would apply to the financing of the purchase and lease of an aircraft. In addition to these terms, there are some concepts that are specific to the lease of aircraft engines.

See Aviation finance.

Ship finance has many unique, historical terms. This guidance note addresses many of the lease terms that would apply to the financing of the purchase and charter of a ship.

See Shipping finance.

This guidance note addresses certain lease terms that would apply to the financing of rail or rolling stock assets.

See Rail finance.

The enforcement regime applicable to a particular asset will depend on the nature of the asset itself.

Chapter 4 of the Personal Property Securities Act 2009 (Cth) applies to the enforcement of security interests over personal property. However, in most commercial leasing transactions, parties will contract out of the enforcement provisions in Ch 4 of the Personal Property Securities Act 2009 (Cth) such that the relevant transaction or security documents will govern how a secured party may enforce its security interest over the asset.

The Cape Town Convention provides for a specific registration and enforcement regime in relation to mobile equipment (including aircraft, rail and space assets). The Aircraft protocol is in effect under Australian law. The rail protocol and the space assets protocol are yet to be ratified by the Australian government.

This guidance note details the enforcement regime applicable to various assets.

See Enforcement.