Do I Need to Register a Security Interest on the Personal Property Securities Register (PPSR)?

Jul 28, 2020

By Business Law Team

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The PPSR is the Australian national register for recording security interests other than in
relation to land. You can register a security interest over personal property, for example,
motor vehicles, stock, and financial property such as shares.

Most commonly a security agreement for the repayment of a loan will give rise to the need
for registration of a security interest on the PPSR. It can be in relation to a specific piece of
property, for example, a motor vehicle, or it can be in relation to all personal property the
person granting the security (grantor) has an interest in at the time of the registration and
after the security interest is registered.

Similarly, those who supply goods on credit to their customers will often enter into a supply
contract and lodge a security interest over the customer’s property to ensure their interest
in the supplied goods on credit are protected in situations such as the customer becoming
insolvent.

Why Do I Need to Register a Security Interest?

It is important to register a security interest as it secures payment of a debt or other
obligation. It ensures your security interest is valid and enforceable in the eyes of the law. It
gives you priority over other’s who may register a security interest after you.

In the event that you have not registered a security interest on the PPSR and a third party
purchases the property which should have had a registered security interest over it, you risk
no longer being able to recover payment.

With some exceptions, priority is generally given to security interests which were registered
the earliest. Therefore, we recommend attending to registration of your interest on the
PPSR as soon as possible.

It is noteworthy that some types of security interests require registration to be recorded
within time frames stipulated by the Personal Property Securities Act.

These timeframes vary depending on the type of security interest and, while it is still
possible to register your security interest after expiration of the stipulated timeframe, the
security interest may not be ‘perfected’ after the timeframe has expired.

As a result, where registration is delayed, a security interest may be more difficult to
enforce against the customer and third parties (including on insolvency) if and when
needed, especially if there are other security interests registered against the customer or
third party when the claim is made.

Registering a security interest is a fairly simple process, however it must be conducted with
precision as an incorrectly registered security interest may be held to be invalid, leaving you
potentially unprotected.

To enforce your rights in accordance with a registered security interest, unless specific
procedural requirements are set out under a security agreement between yourself and the
grantor, you, as a secured party, are entitled to seize the secured property.
You must first provide at least 10 business days’ notice to the grantor and any secured party
with a higher priority interest registered.

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