Personal Property Securities Act
PPSA – the Personal Property Securities Act
The Personal Property Securities Act 2009 (Cth) (PPSA) commenced operation on 30 January 2012.
The PPSA established a new regime for the creation, priority and enforcement of security interests in personal property. The PPSA extends the traditional notion of what constitutes a “security interest”. In addition to covering well known security interests such as mortgages, charges and pledges a “security interest” now also includes (for example):
- long-term leases of personal property (defined in the PPSA as a “PPS lease”); and
- the interest created by a “retention of title” clause.
The centrepiece of the PPSA is the Personal Property Securities Register (PPSR) on which security interests in personal property must be registered. It has fundamentally changed personal property security law such that title in, and ownership of, property is no longer sufficient to preserve an owner’s interest – what matters is registration and the PPSA priority rules. Further, certain security interests, including a PPS lease, are conferred a super priority if they are registered on the PPSR in the required time period.
If you have a “security interest”, you need to get your registrations right. For example, in relation to serial numbered goods, one incorrect number will invalidate the registration of your security interest. We can assist you to understand the registration process and advise on implementing appropriate systems.
If you fail to register a “security interest” in time or at all (this includes incorrect registrations which are invalid), you could lose your interest in your property to other creditors with registered security interests that have a priority over you or, in the event that a corporation goes into voluntary administration or liquidation, to the administrator or liquidator.
Fletcher Law has lawyers experienced in all aspects of the PPSA. We have prepared terms and conditions for a number of clients covering PPSA issues and advised on PPSA disputes.
Based on anecdotal evidence, there seems to be a large number of businesses that have not registered their security interest, have defective registrations or whose interests may have lapsed. We can review your PPSR registrations and advise you whether you are at risk and, if so, what action you can take to try to protect your interests. If you wait until a priority dispute crystallises it will likely be too late.
If a priority dispute does arise, we can advise you of your rights. We have recently been involved in a major dispute between a client and the administrator of a mining services company which went into voluntary administration whilst still in possession of our client’s equipment.
We also refer you to the Publications section of our website where there are materials dealing with PPSA issues in more detail.