The Personal Property Securities Register (PPSR) is an Australian electronic register which provides information on security interests held over personal property. In short, a security interest is an interest in personal property that secures payment of a debt or other obligation regardless of the transaction.
For example, company A lends money to company B and it is documented in a security agreement that company B grants to company A a right in all personal and after acquired property of company B. Company A should then attend to registering this interest in company B on the PPSR.
How can you use the PPSR for your business?
If your business has a security agreement in writing with another entity then you are in a position where you may be able to register this interest. Additionally, if your business regularly engages in leasing or bailing goods then it is important you consider registering your interests on the PPSR.
A benefit of registering your interest is if the entity granting you the interest goes into liquidation. Registering your interest may preserve your priority position against other lenders or suppliers who have not registered their interest on the PPSR against the liquidated company. On the other hand, failing to register your interest on the PPSR may mean that another party with a competing interest can take priority over you.
If your business does engage in leasing or bailing goods, The Personal Property Securities Act 2009 (Cth) (PPSA) means that you are unable to rely on legal ownership of these goods to claim they should be returned if the entity has gone into liquidation and failed to pay you for the goods. Registration on the PPSR is critical in these situations. For more information on situations like this please refer to our previous article.
What could happen if you purchase personal property with a security interest attached to it?
The PPSR can also provide information on personal property, such as cars or boats (but not real estate) to help a potential buyer assess whether any other party claims an interest over the property they are purchasing.
If you purchase personal property, for example a car, and it has a security interest attached to it then it is possible that the person or entity that holds the security interest over this property may be entitled to repossess it.
In order to prevent this occurring it is a good idea to perform a PPSR search on the property you are purchasing before you do so.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.