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Personal Property Security Act (PPSA)

Personal Property Security Act (PPSA)

The Personal Property Securities Act (2009)1(PPSA) is new legislation that substantially changes the way security is taken over personal property.

It applies to almost all forms of tangible and intangible personal property (e.g. boats, vehicles, machinery, inventory, contractual rights) except real estate and applies to everyone including small businesses and consumers. Manufacturing, wholesale and retail businesses are likely to be most affected.

Your business will be affected if it:

  • obtains finance
  • supplies goods on credit
  • supplies or obtains goods under lease or license arrangements (including related party transactions)

You will be affected if you acquire personal property.

Under the new law, any security interest in personal property has to be registered on the PPS Register if it is to receive protection under the Act. This is particularly important for businesses who have traditionally relied on retention of title (Romalpa) clauses to reclaim goods from customers who did not pay for those goods or become insolvent.

What do you need to do? 
If you are a business:

  • consider if you have any security interests that need to be registered and make sure you register them on time
  • search the register to see if any other party has registered a security interest over assets thus gaining a priority security interest
  • check whether any property you plan to buy has a security interest in it
  • register assets used to secure loans you may make
  • register assets where goods are supplied on credit

There are timeframes for registering interests.

All pre-PPSA supplier transactions (those established prior to 30 January 2012) have two (2) years within which registration of the security interest must occur. Please note that where two equally ranking security interests exist, the first to register their security interest will have priority over subsequent equal security interests.

Any supplier arrangements / transactions made post-PPSA will need to be registered within fifteen (15) business days of entry into the security arrangement, otherwise protection may be compromised.

Are you thinking about buying personal property as a consumer?

  • If so, you should search the register to see if there is a registered security interest over the property you are thinking about buying (e.g. car, boat)
  • If you purchase an item of personal property and use it to secure a loan, you should search the register to see if the finance company has registered the security interest and correctly listed the details

The PPSA may pose serious risks for many businesses. Business owners and directors should be aware that customary “asset protection” and separation vehicles and structures may no longer protect their assets and expert advice is recommended. Further general information can be found athttp://www.ppsr.gov.au/Pages/ppsr.aspx

Please contact our office if you are concerned how the PPSA may affect you and your business.

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