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Have you registered your interest on the Personal Property Securities Register?

January 23, 2017

The Personal Property Securities Act (PPSA) was introduced on 30 January 2012 to create a national approach to the regulation of providing security for loans, leases, supply of stock on credit and other financial accommodations. The legislation introduced the Personal Properties Securities Register (PPSR), a national database for the registration of security interests.

By registering your assets on the PPSR, the law recognises your right to repossess your goods, should your customers be unable to repay any debts owing to you. Under the Act, any holder of a security interest in personal property, including livestock, inventory, shares, motor vehicles, plant and equipment, crops and intellectual property, should register on the PPSR to ensure they have a priority claim to that property.

As a seller or lessor, you may need to register a security interest with the PPSR if you:

  • enter into a secured loan agreement with a borrower;
  • lease goods to a third party business for an indefinite period or a period of more than one year;
  • supply stock on credit and previously relied on a retention of title clause;
  • have stock or other goods stored on premises owned by a third party (under a commercial storage arrangement) for no defined term or a term of more than one year;
  • have previously relied on a Retention of Title (ROT) clause for an interest in goods supplied.

Sellers

Making a registration indicates to searchers that you are claiming an interest in the goods or assets you are selling on retention of title terms, or have consigned to someone else on your behalf. The registration protects your interest in the goods or assets should the customer default or become bankrupt.

If you don’t make a registration on those goods or assets and your customer becomes bankrupt before they have fully paid you, your goods may be sold to pay secured creditors first. If you are not registered, you will be an unsecured creditor in an insolvency and may not recover much, if anything, of what you are owed.

If you register as early as possible, you benefit by having priority over other interests. It also helps you to protect your interest even if the goods or assets are sold on, mixed or installed onto other goods.

Lessors

If you lease or hire equipment to third parties, where the arrangement is for a period of one year or more, registering a security interest over your goods is important. Goods that are leased or hired out without a registration made may be sold on to pay creditors, in the event of an insolvency of the lessee.

When should you register your interest?

You should register your security interest to ‘perfect’ (validate) your rights as soon as you become aware that you will be dealing with a new customer or with an existing customer on new terms. You should not wait until the goods have been delivered to the customer before registering your interest.

Your rights can be protected from the time of registration, meaning that your interests will be secured ahead of other creditors should the customer default. If you do not register your security interest, you may also lose your rights to another creditor, who has registered or ‘perfected’ their security interest over the property.

There are provisions for ensuring that your security interest ranks above another person’s security interest in the same property, however the requirements can be complex and may vary depending on the particular circumstances.

Contact us

If you would like more information about the PPSR or assistance with identifying or registering your security interests, please contact us on 07 3217 2477.