Personal Property Securities Act
The Personal Property Securities Act 2009 (Cth) (PPSA) is legislation about personal ownership in Australia that came into effect on 30 January 2012.
The legislation established a new Personal Property Securities Register (PPS Register) which replaced a number of registers, such as the ASIC Charges Register. The PPS Register also allows people to register their interests in personal property, which were previously unable to be registered. If you do not register, you may not be able to enforce your interest.
Personal property is all types of property other than land, fixtures, water rights and some statutory licences. For example cars, boats, equipment, intellectual property, shares, and debts are all personal property.
A security interest is an interest held over personal property, which is used to secure the performance of an obligation. A security interest gives the person who holds the security interest certain rights upon registration in the PPSA Register in relation to the property, for example, the right to repossess property if a debt is not paid.
Common arrangements subject to security interests include charges over a company, chattel mortgages, conditional sale agreements (for example, retention of title arrangements), hire purchase agreements, consignments and leases of goods.
The PPSA fundamentally changes the way we think about security over personal property and, to some extent, does away with the concept of “ownership”. Failure to secure an interest in personal property on the PPS Register may result in you or your business having no claim over the asset in an insolvency – even if you own it.
The PPSA impacts all individuals and businesses including those who:
- Are financiers or provide vendor finance;
- Sell goods on credit (e.g. retention of title);
- Lease motor vehicles, plant and equipment or other assets;
- Provide stock or other assets on consignment to third parties;
- Store goods with others; and
- Grant licences to other parties to use products, trademarks or other intellectual property.
Your bank may also require you to register your security interest in personal property to protect the assets against which it has lent. Failure to do so may leave you in breach of your loan terms.
You will also need to consider the PPSA if you are acquiring personal property to ensure it is not already secured by another party.
The Personal Property Securities Act 2009 (Cth) (PPSA) has been in effect for over 6 years, yet many businesses are still unaware of the existence and the wide-reaching impact of the PPSA.