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It is important that you proactively take steps to protect yourself and your business by registering security interests on the Personal Property Security Register
The Personal Property Securities Register (PPSR) is a national, electronic register of security interests in personal property that was established on 30 January 2012.
What does the PPSR cover?
The PPSR covers all types of personal property except for real estate.
If you have an interest in personal property that secures payment of a debt or another obligation you can protect your interest in that property by registering it on the PPSR.
What happens if I fail to register an interest on the PPSR?
Failing to register a security interest on the PPSR or not registering it in time may result in loss of your right to the security interest if the grantor becomes insolvent, loss of priority against other secured parties if someone else (a subsequent security interest holder) registers their interest on the PPSR ahead of you and in some cases, loss of super priority that is available in certain cases
If the grantor is a company, Section 588FL of the Corporations Act 2001 (Cth) provides that you must register your security interest within 20 business days after the security agreement giving rise to the security interest came into effect.
The Personal Properties Securities Act 2009 (Cth) (PPSA) also provides timeframes for registration of PMSI’s depending on the type of collateral.
Regardless of the type of security interest, you should register your interest on the PPSR as soon as possible to ensure your rights are protected!
Are you sure it affects me?
If you are in business and are engaged in the sale or supply of goods you may already be affected by the operation of the PPSR. If you are thinking of becoming involved in these types of businesses it is also essential that you understand how the PPSR operates to ensure that you do not inadvertently leave yourself unprotected by failing to register your interest or failing to do so in time.
A wide range of business activities are caught by the operation of the PPSR. For example, if you are involved in any of the following activities it is possible that the PPSR affects the operation of your business:
- Wholesaling or selling goods on retention of title terms;
- Hiring, renting or leasing out of goods;
- Building or construction;
- Agriculture of farming;
- Buying or selling valuable second-hand goods;
- Automotive services or supply industry;
- Selling art or other goods on consignment;
- Raising finance using your stock or other assets as security/collateral for any loan; and
- Working as an adviser to clients who engage in any of the above activities.
How can the PPSR help me?
As well as providing a national central register where you can secure any interests you have in personal property, the PPSR also provides a useful resource for checking whether goods or other assets you may be thinking about purchasing are encumbered.
Before purchasing goods it is recommended that you search the register so that you can ensure that the goods or assets are unencumbered. . This is important as it helps to ensure that any goods you purchase are safe from possible repossession as a result of an existing charge over the goods or assets which the seller may not inform you about.
Secondly, if you are trying to raise funds for your business using your stock or assets as collateral for any loan, the lender is able to search the PPSR to satisfy themselves that your goods or other assets are not subject to a pre-existing charges.
A properly registered interest on the PPSR places you in a position of priority to other security interests in the instance the entity becomes insolvent.
Conclusion
It is important that you proactively take steps to protect yourself and your business by registering security interests on the PPSR.
Ensuring that registrations on the PPSR are correct, complete and within time is equally important. Our experienced lawyers can advise and assist you on all aspects of the operation of the PPSR.
If you or someone you know wants more information or needs help or advice, please contact us on (07) 5443 4866 or email mklein@gwlaw.com.au.
Brendan Bathersby
Partner
(07) 5443 4866
Madeline Klein
Solicitor
07 5443 4866