How to use Personal Property Securities Register to protect your rights over personal property?

Personal Property Securities Register (PPSR) is a national government register that records all registered security interests in personal property. It was introduced to facilitate the legislation, the Personal Property Securities Act (PPSA), which provides a national regime regarding the regulation of security interests over personal property. The legislation and PPSR came into effect on 30 January 2012. It is crucial to understand how PPSR works as the registration of security interests will affect outcomes upon enforcement of ones’ entitlement over personal property.

 

Personal Property

Under PPSA, personal property is generally the property other than land, buildings and fixtures to land, which can be tangible or intangible including:

  • Goods;
  • Motor vehicles;
  • Boats;
  • Planes;
  • Jewelry and Artwork;
  • Intellectual properties such as copyright, patents and designs;
  • Bank accounts and debts;
  • Shares and other financial property;
  • Financial instruments;
  • Private commercial licenses.

 

Security interests

A security interest is an interest in relation to personal property that in substance secures payment of a debt or performance of an obligation. If individuals or organizations register security interests on the PPSR, it will tell the world at the large they have rights over personal property. Therefore, PPSR provides a more transparent way of dealing with personal property for consumers and businesses as anyone can check the registered security interests on PPSR. Upon registration, the security interest will be ‘perfected’, which in turn provides legal protection regarding that security interest. However, the registration is voluntary, and therefore a clear search does not necessarily mean that the personal property has a clear title.

 

 

Importance of PPSR and examples of security interests

 

If individuals or organizations have security interests in personal property, it is important to register the interests as the registration ‘perfects’ security interests. The perfected security interests will then have priority over other unperfected security interests. Also, in the event of bankruptcy or insolvency, the creditor who has registered security interests in personal property owned by a bankrupt or insolvent company will have priority in the title of the personal property over that of unregistered creditors.

 

Register of encumbered vehicles

 

The most common examples of PPSR are encumbrances over motor vehicles. By conducting a search over a vehicle, the PPSR will email a search certificate listing all registered records of encumbrances over motor vehicles. This is known as Register of encumbered vehicles (REVs). Therefore, it is vital to conduct REVs before buying any secondhand vehicles.

 

Retention of title

 

Businesses should also use the PPSR to protect their interests in the retention of title (ROT) arrangements. A ROT clause is a provision in a contract for the sale of goods where the seller retains legal ownership of the goods until the specific obligation is discharged. The sellers should register the contract to protect their security interests. In the event of bankruptcy or liquidation, if the sellers have registered their security interest, then they will be secured creditors and have better protection compare to unsecured creditors. Proper registration of contract on PPSR will also avoid personal property vesting in a company upon its liquidation.

 

Commercial consignment

 

Commercial consignments may also be deemed to be security interests. A consignment is considered to be a ‘commercial consignment’ if：

  1. The consignor retains an interest in goods that have been delivered to the consignee.
  2. The consignor delivers the goods for the purposes of sale, lease, or disposal.
  3. Both the consignor and consignee deal with these goods in the ordinary course of their businesses.

Commercial consignments provide consignors security interests that can be registered on PPSR. The consignors would be able to obtain legal protection even though the consignees have possession of the goods. However, the contract must be registered on PPSR correctly.

Registration fees and search fees

 

A search can be conducted online with a search fee of $2, or by phone with a search fee of $7. A search certificate or a verification statement can be obtained with no extra cost. However, a special-purpose report can only be acquired over the phone with a charge of $300 per hour.

 

The amount of registration fees depends on the longevity of the security interest. To create a registration online, it will cost:

  • $6 to register a security interest for 7 years or less
  • $25 to register a security interest for 7+ years to 25 years
  • $115 to register a security interest with no set end date

 

 

The utilization of the Personal Property Security Registry can affect individuals and businesses in many different ways, contact Morrison Specter for professional legal advice to protect your security interests.