Have you registered your PPSR security interest?
The Personal Property Security Register (PPSR) is a national, electronic register of security interests in personal property. It was established on 30 January 2012. A PPSR security interest can be held in goods, vehicles, intellectual property, shares and any other forms of personal property. Security interests in land should not be registered on the PPSR.
What is a PPSR security interest?
A PPSR security interest is any interest in personal property that is created by an agreement that secures a payment or performance of an obligation to another person. The PPSR is highly relevant to businesses engaged in:
- leasing and hiring personal property;
- mortgaging personal property;
- supplying goods under retention of title arrangements; and
- imposing a charge over personal property to secure loan repayments.
Due to an amendment introduced on 1 October 2015, leases of serial numbered goods for periods between 90 days and one year do not need to be registered on the PPSR unless they are ‘in substance’ security interests.
What happens if you don’t register a PPSR security interest?
A failure to register interests on the PPSR could result in the priority of interests being lost to other parties with competing, registered interests. This could have particularly dire consequences if the party in possession of your goods becomes insolvent. In these circumstances, your property may be seized and sold to pay debts owed to the other party’s creditors as they were in possession of the insolvent entity at the time of insolvency.
Failing to register also has implications for third party purchases. Generally, someone can take property free from existing security interests that are not registered and perfected. There are specific rules regarding taking property free for different circumstances and collateral classes. For example, for serial numbered property (e.g. vehicles), buyers can take the property free of security interests if they search the PPSR by serial number and do not find any registered security interests.
What do you need to do?
- If your business enters into any transactions where another person comes into possession of your property, you should register your security interest on the PPSR as soon as possible. Such transactions could include credit, retention of title, hire-purchase, consignment or storage.
- Be aware that different rules apply to different types of collateral, transactions and commercial and consumer property.
- The legislation allows parties to contract out of a range of rights and remedies outlined in the Personal Property and Securities Act. However, this does not apply to collateral that is predominantly used for domestic, household and personal purposes.
- If you are purchasing personal property, ensure that you conduct proper searches on the PPSR.
Need advice in regards to registering your security interests on the PPSR? Is someone in possession of your property at risk of insolvency? Please don’t hesitate to contact our experienced Newcastle commercial lawyers at Butlers Business and Law on (02) 4929 7002 or fill out an enquiry form on our website.