The Personal Property Securities Act 2009 (Cth) |Act| provides an electronic register to record “security interests” for personal property e.g. machinery, motor vehicles, etc. held as security or collateral to repay a debt or financial obligation.
PPSR registration information
Personal Property Securities Register|PPSR|records:
- Identity of the Grantor who owns or holds an identifiable interest in the secured property
- Identification of the secured property
- Date the Grant was made by the Grantor
- Amount secured
- Identity of the Secured Party who hold the entitlement over the secured property in preference to any other interested party.
Registration Perfects the security interest
Registration using the PPSR protocols “perfects” the rights of Secured Party to ensure they have priority over the secured property in the event of insolvency or another creditor claiming an interest in the secured property.
PPSR is a public record readily accessible to third parties to digitally search for identical personal property and /or the Grantor Identity to establish the secured property has not been charged to another creditor. If you are about to buy a motor vehicle, machinery; give credit to a customer enter into a legal agreement which includes personal property a search may avoid a fatal transaction.
Registering the Security interest before or on creation of the security interest is critical to perfect and protect your interest. Searching the PPSR before accepting a personal property to establish it has not been charged will give you comfort knowing the Grant you will register is more likely to be valid and effective.
PPS Lease – for Goods
Goods (not fixtures) leased under a Commercial Lease become goods under a PPS Lease.
Commercial Lease Checks
Both landlord and tenant should identify goods in a Schedule to the lease and then register them on the PPSR.
Landlords should :
- Search the PPSR to identify any security interests registered over your goods by the previous tenant’s financier before you lease or sell the goods. A Release should be obtained and registered on the PPSR before lease or sale.
- Register a security interest (not a transfer or assignment of ownership) over abandoned personal property of the tenant on the premises at the end of the lease term.
- Register a security interest over any “cash” security deposit (in the absence of a bank guarantee) for the landlord to become a secured creditor of the tenant.
Tenants should check:
Landlord is permitted to register a security interest;
- Tenant’s right in the Lease to receive notices about registrations required under section 171(1) of the Act.
- Goods leased by the landlord are not registered for security interests associated by the land lord with previous tenant any previous tenant’s financier. If so a release should be obtained and registered before the Lease commences.
- Registration of new security interests will not breach the terms of your financing arrangements.
In relation to a lease security deposit, only one that is in cash creates a security interest − the landlord becomes a secured party following registration of a security interest. It is important to register a security interest over any cash security deposit on the PPSR. Alternatively, substitute a bank guarantee for the cash security deposit if permitted in the lease.
If you are a tenant, you should :
- Confirm the landlord has the right to register a security interest and your right to receive notices about registrations (pursuant to section 1571(1) of the Act) is included in the lease;
- Ensure any previous tenant’s financier has released any security interests that were registered over goods leased by the landlord to the previous tenant; and
- Ensure registration of new security interests does not breach the terms of any other financing arrangements you might have.