Our recent webinar featuring Paul Mead (our CreditorWatch PPSR expert) and Terry Ledlin (Special Counsel of Ledlin Lawyers) was a great success and one of our most attended webinars ever.
In case you missed it, the Personal Property Securities Act (2009) (PPSA) requires you to think differently about how you protect your goods. Here is a quick takeaway of some important points covered in the webinar:
1. The PPSA came into effect in January 2012 and provides a regime where “security interests” in personal property (not land) are given priority over other competing interests.
2. The PPSA requires that you understand the distinction between real property and personal property.
- Real property is land and real estate, including anything that is affixed to the land (like a house or building).
- Personal Property is (generally speaking) everything else including goods, cars, boats, jewellery, shares in companies, certain rights etc.
3. A credit account or a credit application does not of itself create a security interest. Your terms and conditions (the Security Agreement) will create a contract with your Customer (the Grantor) which provides for a security interest. The usual security interest will be the retention of title (ROT) interest that a seller will retain until payment is made by a Customer.
4. The PPSA does not create in itself security interests – the PPSA creates a regime for notification of security interests via the PPS Register (PPSR). There are specific registration timeframes for types of security interests.
5. The PPSR is like an online notice board that allows for perfection of the security interest by registration and the registration process is very prescriptive. Therefore, if the Register is misleading or incorrect, the registration will be ineffective (and you will lose priority).
6. Generally speaking, a Grantor is identified on the PPS Register by:
- Individual – name and date of birth as per driver’s licence;
- Company – ACN
- Trust / partnership – ABN
- Any other body corporate – its official name
7. A PMSI (Purchase Money Security Interest) provides a “super priority” for credit providers. To claim this priority, it must be registered as a PMSI on the PPS Register.
8. If you fail to register your security interest OR the registration is ineffective AND your Customer suffers an insolvency event (appoints an Administrator or has a Liquidator appointed) then ownership is lost for those goods or proceeds that are in the possession of the insolvency practitioner. Your goods will vest in the Grantor on insolvency.
9. You can no longer rely on title, ownership or contract terms – registration must take place.
10. Many initial registrations were for 7 years which means they will expire in January 2019. Once the registration lapses, security and priority is lost so you need to act now to ensure continuous perfection.
In our next webinar on 6 September 2018 (save the date now), we will cover:
- How to register on the PPSR
- The importance of registering correctly
- Common mistakes made when registering
- What is so important about January 2019 and what you should be doing now
- Whether you should look at reviewing and changing your terms now
- Whether you should amend or renew your registrations ahead of the January 2019 deadline
More articles like this: PPSR Series Part 2: Decoding PPSA Terminology