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You are here: Home / News / Property & Conveyancing / The Personal Property Securities Register (PPSR)

28/03/2013

The Personal Property Securities Register (PPSR)

The Personal Property Securities Act came into force on 30 January 2012 establishing the Personal Property Securities Register (“PPSR”) which replaces more than 50 State and Territory based laws and security registers.

The PPSR makes major changes to the registration of security interests and assets and also the notation of legal title over property in the event of insolvency. The failure to register when required or to understand how the new rules operate could prove very costly.

The PPSR is effectively a national electronic noticeboard of security interests that are attached to personal property.

The PPSR has wide-reaching uses, including:

  • Finance companies that provide loans and receive a security interest in the form of personal property (eg. Car) will need to register the interest in that property on the PPSR;
  • Business operators who hire out or lease out assets to others will need to register the interest on the PPSR;
  • Business operators who sell personal property on credit consignment, or on a retention of title arrangement will need to register their interest on the PPSR;
  • Consumers who are purchasing personal property will be able to check the PPSR to ensure that the property they are purchasing is not subject to a security interest (eg. Check that there is not a loan owing on a car that you wish to buy).

For the purpose of the PPSR, personal property includes both tangible assets (including goods, crops, livestock, vehicles, paintings, machinery, debtors, etc) as well as intangible assets (such as licences, intellectual property and trademarks, hire purchase agreements, accounts receivable, long term leases etc). Exclusions from the definition of personal property include land, water rights and gaming rights.

The purpose of the PPSR is to establish a central list of security interests over assets. Failure to register an interest in an asset may result in you or your business having no claim over that asset in the event that one of your customers falls into insolvency. As an example, X Pty Ltd manufactures and leases out equipment. One of the clients that it leases out to falls into administration. Unless the equipment is registered on the PPSR, then the Administrator could sell the equipment for the benefit of the creditors, with X Pty Ltd having no claim over the equipment or the funds once sold, despite being the legal owner of the equipment.

Thus the concept of title is essentially irrelevant in the event of administration. Under the new regime, assets are essentially deemed to be available for realization by the insolvency firm regardless of who has title to the asset. Title to the assets does not give you rights over your own assets. Rather your rights, in the event of insolvency, are determined by the new rules. To have any rights, your interest must be registered on the PPSR.

The new rules also provide for the determination of priority where there are multiple interests over the same asset. This is aimed at providing more certainty for finance companies, as well as business operators, who supply personal property on credit, consignment or retention of title arrangements.

If you are a business operator who had supplied personal property on credit, consignment or retention of title basis, you can create registration by going to the PPSR website here.

All such businesses should put in place internal procedures to ensure that new securities are correctly registered on the PPSR. This may involve staff training. Visit the PPSR website to access training materials.

All businesses should periodically conduct a search on their own business to ensure that the information lodged on the PPSR by secured parties for assets you are using is accurate. Where it is not, you should request that any inaccuracies be amended. On the other hand, if you are taking security over other parties, then you should conduct a search to ensure that registration is properly recorded.

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