The PPS Act is arguably the most significant reform of finance law since the introduction of consumer credit legislation in the 1980s and the introduction of GST.
Personal Properties Securities Legislation NSW
Personal Property Securities Act 2009 Overview
The registration provisions of the Personal Property Securities Act 2009 (the Act) came into force on 30 January 2012. The Act brings existing Commonwealth, State and Territory laws and registers regarding personal property security interests together into one national system. It replaces approximately 70 Commonwealth, State and Territory Acts.
The Act establishes a Personal Property Securities Register (the PPSR) which will replace over 40 registers, including the ASIC Company Charges Register and REVS (Register of Encumbered Vehicles).
Quick Summary of the Reform
The PPS Act is arguably the most significant reform of finance law since the introduction of consumer credit legislation in the 1980s and the introduction of GST.
The Act provides rules for the creation, extinguishment and enforcement of security interests in personal property and for determining priority among competing security interests.
One of the key changes of the reform is the new PPSR which allows lenders and businesses to register a security interest in personal property. Secured parties, buyers and other interested parties can search the PPSR to find out if a security interest is registered over particular personal property.
The Act is relevant when a secured party takes an interest in personal property as security for a loan or other obligation, or enters into a transaction that involves supply of secured finance.
Under the Act, personal property is defined as any form of property except land and buildings and fixtures which form part of land. Personal property includes tangibles such as cars, art, machinery and crops as well as intangibles such as intellectual property and contract rights.
Priorities Between Security Interests
Priority rules are relevant when the same personal property is subject to two or more security interests. If the debtor defaults, the rules determine the order of priority in practical terms, who gets paid and who doesn’t.
See Also: The Debt Recovery Process in NSW
Perfection is a step required to be taken in relation to a security interest in order to ensure priority against other parties who may have an interest in the same collateral. A secured party can perfect their security interest and gain priority over the security through registering their interest, or (in some cases) by possessing or controlling the collateral.
Retention of Title
Suppliers who sell goods that are subject to retention of title are no longer able to rely on their title to protect their interest in those goods. They should register their interest on the PPSR. Failure to do so may result in the supplier losing their right to take possession of the goods if the debtor defaults. Single registration may cover subsequent security interests in property supplied under later transactions.
When in Doubt
- Register your security interest over personal property. You will have better standing when dealing with disputes where you have a perfected security interest instead of an unperfected one.
- Contact a Commercial Litigation lawyer for advice regarding registration, priority, enforcement and other relevant issues.
Liability limited by a scheme approved under Professional Standards Legislation