The Personal Property Securities Register (“PPS Register”) commenced on 30 January 2012.
What is the PPS Register?
It is a national register that records interests over property by a lender, financier or owner.
It is like recording a mortgage over land at the Land Titles Office but with assets other than land.
It is not just for banks and financial institutions but for anyone, or any business, that for example:
• supplies goods under consignment (where unsold items may be returned to supplier);
• retains title to goods sold (where a buyer possesses the property but does not own it until the full price for it is paid);
• supplies finance to others over property;
• leases machinery or any type of goods to others;
• make loans to others;
• take charges over business assets.
Why does an interest need to be recorded the PPS Register?
If individuals and businesses do not take steps to register their security interests over goods, they risk losing assets owned by them to other creditors like banks, who have registered interests, if the customer becomes insolvent or bankrupt.
What is a transitional security interest (TSI)?
A TSI is an interest that, in effect, secures payment or performance of an obligation (like the examples above) which existed prior to 30 January 2012 and hasn’t yet been registered.
If you or your business is a secured party with a TSI and it is not yet registered, it needs to be registered before midnight on 31 January 2014 to preserve the priority status of the TSI. Registration is free.
If it is not registered by 30 January 2014, another person with a security over the same item/good/collateral may have priority to be paid out ahead of you, if the customer defaults.
There is also a risk that if the customer enters bankruptcy or insolvency and the interest has not been registered, you or your business may lose their security interest altogether.
Information can be accessed on the Governments PPSA website at www.ppsr.gov.au.
Author: Linda Alexander, JMA Legal
This article is general information only and should not be relied on without obtaining further specific information.