The Personal Property Securities Act 2009 (“PPSA”) came into effect on 30 January 2012, bringing with it a raft of changes to the enforcement of securities over personal property, including a new unified Federal law.
The transition period for the new laws ended earlier this year, meaning that the new system is now in full swing. Many companies are still trying to understand how best to protect their interests under the most significant reforms ever to securities in relation to property other than land. The laws are far reaching and cover traditional securities such as mortgages and charges, while also extending to retention of title, lease and bailment arrangements.
The PPSA has created a national system that consolidates the State and Commonwealth laws and systems for the registration of personal property securities interests into one national register.
What interests are affected?
Any interest in relation to personal property that is used to secure payment or performance of an obligation. For example:
- The usual interests such as charges, mortgages, pledges; and
- Arrangements not previously thought of as security interests, such as retention of title clauses, leases of goods, hire purchase agreements and even conditional sale agreements.
What is the consequence of not registering an interest?
A securities interest which has not been registered:
- In most cases will be void where a party is wound up, made bankrupt, or an administrator is appointed;
- May be extinguished as a consequence of a parties dealings with third parties; or
- May lose priority against properly registered interests.
What do you need to do?
As a business owner you should immediately review documents used in your business in connection with customers to ascertain whether a security interest exists. If security interests are created then you will need to:
- Amend those documents; and
- Establish procedures for registration of the security interest on the Personal Properties Securities Register.