Despite the transitional periods having expired last year, the requirements (and existence) of the Personal Property Security Register (PPSR), created pursuant to the Personal Property Security Act 2009 (Cth) (PPSA), remain unknown to many consumers and suppliers. If you are involved in business or personal transactions regarding the provision of goods on any terms other than a cash on delivery basis, or you have a line of credit with suppliers, or provide a line of credit to others, you should familiarise yourself with the PPSR and PPSA.
What is It?
The PPSA governs how a person or company’s security interest is registered and protected in certain situations. One of the most common examples is where a supplier seeks to retain an interest in goods it has provided to a consumer until the consumer pays for those goods. This is often known as “retention of title”, and appears as a standard clause in many supply agreements.
The PPSR is the central database where all security interests in Australia are registered.
Why Do I Need to Perfect My Interest?
Section 55 of the PPSA deals with priority of security interests. Essentially, the rules of priority are as follows:
Perfected interests take priority over unperfected interests
If two interests are perfected, the interest that was registered first takes priority
If two interests are unperfected, the interest that was created first takes priority
In other words, if two people share an interest in the same goods, the person who has perfected their interest will be able to take action to recover loss/enforce its interest ahead of the person who has not perfected their interest, even if the unperfected interest was created first. This can have significant financial consequences for a creditor.
How do I Perfect My Interest?
Whilst there are certain requirements for particular circumstances, in general, the easiest way to perfect a valid security interest is to register your interest on the PPSR. Registration can be done online for a small fee.
Accessing the PPSR for Peace of Mind
You can search the PPSR to ascertain if a particular item is subject to a security interest, or whether a particular person has granted a security interest. This can assist in determining, for instance, whether the item of value (such as a car, boat, or expensive artwork) that you may be considering purchasing is subject to claims and interests from someone else.
As with registration, searches can be conducted online for a minimal fee.
If you are a supplier, providing goods on credit, or a purchaser, seeking to acquire an item of significant value, appropriately utilising the PPSR is essential to the protection of your interests.
The law in this article is current as at May 2015, but may have changed by the time you read this. For more information on how to ensure your interests are properly protected under the PPSA, please contact our office.