DEADLINE: PERSONAL PROPERTY AND SECURITY REGISTRATION

In-House Memo (Factual Information)

DEADLINE – Personal Property Securities Register (PPSR)

The transitional deadline for registration of transitional security interests (TSIs) is fast approaching. Register before the end of 31 January 2014.

The PPSR commenced on 30 January 2012 as a system for creation, prioritising and enforcement of security interests[1]. It is a public register of security interests in personal property, which includes generally all property other than land, fixtures and certain statutory interests.

Transition arrangements under the Personal Property Securities Act 2009 (Cth) (‘PPS Act’)grant transitional privileges for what are called transitional security interests (TSI’s). TSI’s  aim to register and therefore protect security interest made against personal property prior to 30 January 2012.

If you have a security interest against someone’s personal property made prior to 30 January 2012 that is not yet registered, you need to register it before midnight 31 January 2014 (Canberra time) to take advantage of “temporary perfection” and preserve the priority status of your TSI.

Temporary perfection allows the security interests made before the register started to be ‘temporarily perfected’ and therefore take the highest level of protection against later competing security interests in the same personal property. Failure to register your TSI places any interest made before 2012, if unregistered after 31 January 2014, at risk of losing priority to a later registered interest.

This means that another person with a security interest in the same collateral with a higher priority ranking will be paid out ahead of you in the event that the owner of the personal property defaults or tries to on sell.

Registration provides protection if the goods are repossessed or on-sold without loan repayment. It is critical for any business that supplies goods, whilst retaining ownership until payment is completed. If the borrower uses the goods or chattels as security for a new loan that is registered, the registered interest will receive priority against the earlier unregistered interest.

The PPSR also enables those purchasing goods to check whether any other interests in the goods exists. A superior registered interest prior to purchase of chattels or goods – by any lender using the same goods as security – will have priority.

Registration is free and should be completed without delay before 31 January 2014. URGENT ACTION IS REQUIRED.

Hubert Algie