Everything You Need to Know About Personal Properties Securities Act

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personal propertyThe Personal Property Securities Act 2009 and its registration provisions were implemented on January 2012 in Australia. Replacing almost 70 different Commonwealth, State as well as Territory Acts, this singular acts brings the three together along with registers of personal property security interests and integrates them all into a unified national system.

Additionally, the Act establishes a personal property security interests (PPSR) register, which shall be replacing approximately 40 registers. These include the Register of Encumbered Vehicles (REVS) and the ASIC Company Charges Register.

Quick Summary of the Reform

Since the introduction of the GST and the consumer credit legislation-both of which took place in the 1980s, the Personal Property Securities Act has by far proven to be the most significant finance law reform measure. As the names suggests, it lays down the rules for both the creation, elimination, and execution of personal property security interests and the determination of priority among security interests that compete with each other.

A very important change that has been made through this reform is the new PPSR. This permits both businesses and lenders to register a personal property security interest. Now, if a secured party, buyer, or any other interested party wants to find out whether any registration has been affected in connection with another property, all they need to do is search the PPSR.

The Act becomes relevant in cases which involve a secured party taking an interest in a personal property for the purpose of using it as a security for loan or any other reason. It is also relevant when the secured party enters into a transaction which involves secured finance supply.

By this Act, the term ‘personal property’ has been defined as ‘any form of property barring land, buildings and fixtures which form a part of the land’. It includes, but is not limited to tangible materials such as machines, vehicles, crops, and art among others and intangibles such as contract rights and intellectual property.

Priority of Interests 

Rules of priority become relevant in cases where the same property becomes subject to two or more security interests. If the debtor makes defaults on payments, it is the rules that determine the order of priority, for example, who is paid and who isn’t

Perfection is one step that is a must to be taken as regards to a security interest to make sure there is priority against other interested parties in the same collateral. A secured party can attain priority over security by registering their interest, and in certain situations by controlling the collateral.

Retention of Title

Those suppliers who sell goods and are subject to title retention can no longer rely on the title itself to protect their interest in those goods; they must without any delay register their interest on the PPSR. This is because if they fail to do so, it might result in the supplier losing the right to take possession of the goods if the debtor makes defaults. In cases where property is supplied under later transactions, one single registration can cover all subsequent interests in security.

When in Doubt

  • Make sure you are registering your security interest over your personal property. This will ensure that you have a clearer understanding upon dealing with disputes where you have a perfected security and not an unperfected one.
  • Always contact your lawyer for advice related to registration, enforcement, priority and related issues.

If you have come to the decision to register for personal property securities act, the sooner you do so the better it is for you. While registering for PPSR does not have any specific deadlines or time limits, it is simple logic that a business that has registered before yours will have a priority-level higher than yours as well.

The registering process is fairly simple. The many various toolkits and software solutions that are available can take you through the whole process, and will make sure that all your information has been entered correctly so that you can take complete advantage of the registry. While the process may take up some of your time, it'll definitely be worth it. As with other things, it is better have some insurance that you do not need than to need insurance and not have it.

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