Protecting Your Business in a PPSA World
During the ‘Bullet Proof You Business‘ seminar on July 24th, hosted by the team at ClarkeKann Lawyers, Miles Anderson introduced us to the PPSA or, in long form, the Personal Property Securities Act (2009). As a business owner and senior manager I thought I knew all there was to know about this piece of legislation and the potential ramifications for the unwary, but as Miles pointed out on the day, there are still a lot of pitfalls associated with the taking of security interests in personal property.
The PPSA is an Act designed to regulate the taking of said security interests in all property other than real estate. Prior to the release of the Act there were approximately 70 pieces of Commonwealth and State Legislation that regulated security interests in personal property, as well as a number of “security interests” that were not regulated by legislation. The PPSA has brought all these under the one banner so that a consistent set of rules can apply in all states and in respect to all personal property.
“Any business that leases, rents or sells
goods under terms needs to have their
interest in those goods registered on the
PPSR. If you don’t, your ownership of
those goods will not be recognised.” VEDA
The act commenced on 30th January 2012 and, on the same day, the Property Securities Register (“PPSR”) was established. The PPSR has replaced a number of Commonwealth, state and territory government registers for security interests in personal property, including those for bills of sales, liens, chattel mortgages and security interests in motor vehicles such as REVs (Register of Encumbered Vehicles). The PPSR has also replaced some Australian Government registers such as the Australian Securities and Investments Commission’s Register of Company Charges.
It is a good idea to search the register when you are buying personal property such as a car. If a bank has a registered security interest on the car, they could repossess the vehicle if the person selling it does not pay their loan.
However the PPSR is not limited to motor vehicles. According to the Australian Financial Security Authority, common examples of personal property that is able to be registered on the PPSR includes:
“Statistically, there is a one in five
chance vehicles offered for private
sale in NSW will be carrying a debt
for which the new owner could
become liable.” – NSW Fair Trading
- motor vehicles
- caravans and trailers
- plant and machinery
Personal property also includes non-material items such as:
- intellectual property
- investment instruments
The PPSR is typically used by:
- finance companies that provide loans on the basis that they receive a security interest in an item of personal property to register their interest in the property on the PPSR
- business operators who sell personal property on credit, consignment, or on a retention of title arrangement to register their interest in the property on the PPSR, and
- consumers who are about to purchase personal property, such as valuable second-hand goods (i.e. a used car), to search the register before buying to make sure that the property is free of a security interest.
Next Tuesday I will take you through the concepts surrounding the PPSA to help you decide whether you need to register your interests on the PPSR.