Australia: Personal Property Securities Reform in Australia

Last Updated: 29 September 2010
Article by Laura Houlihan and Anthony McFarlane

The Personal Property Securities Act 2009 (Cth) (Act) and the Personal Property Securities (Consequential Amendments) Act 2009 (Cth) (Amendment Act) are expected to commence in May 2011. The Act creates one national system for the creation, registration and perfection of security interests in personal property, bringing together the Commonwealth, State and Territory regimes currently in place. The Amendment Act will ensure that any other legislation in effect is compatible with the new system.

There are currently over seventy different laws regulating personal property securities in Australia resulting in numerous registration requirements and inconsistencies between systems. Thus the harmonisation of the various regimes is vital. The Act has been compiled based on similar reforms in New Zealand, Canada and the USA.

Key summary of the Act

Personal property is any form of property other than land or buildings and fixtures which form part of that land. Personal property includes tangible property such as cars, boats, machinery, crops, as well as intangible property such as shares, intellectual property and contractual rights.

A personal property security exists when a secured party takes an interest in personal property as security for a loan or other obligation or enters into a transaction that involves the supply of secured finance.


The Act creates the Personal Property Securities Register (PPSR) which will be the definitive register that records security interests in personal property. The PPSR will be computer based, publicly accessible and updated in real time. The PPSR will make registrations and searches more efficient and simpler to conduct. The risk of security interests not being revealed to third parties is also lessened by the new system.

Existing registers will close and some security interests will be migrated to the PPSR. Any security interests that are not migrated or which are not currently registered have a designated 'Migration Time', as defined in section 306 of the Act1, to register on the PPSR to preserve priority.

The Insolvency and Trustee Service Australia will be the responsible party for establishing the PPSR and a contact centre for customers.

Currently security interests given by individuals are not registerable under the existing charges regime, however this will change. Individual security interests will be able to be registered and subjected to a statutory priority and enforcement regime, providing greater certainty to financiers and promoting investment in new classes of assets. Many commercial arrangements, such as conditional sale and retention of title arrangements, will be considered as security interests under the new regime and will therefore be registerable.


The reforms rewrite current law relating to how priority disputes are to be resolved where more than one security interest is given over the same property. Under the Act, a perfected security interest has priority over an unperfected interest. If both interests are perfected, then priority will depend on the order of perfection. If both interests are unperfected, priority will be determined by order of attachment (i.e. the process by which a security interest comes into existence). Purchase money secured interests have a form of super-priority in that they operate as an exception to the usual "first in time" rule subject to a number of qualifications and exceptions.


If a security interest is not perfected in accordance with the Act, third parties dealing with affected property may take it free of any security interest in that property. The Act sets out the rules of determining priority in those situations. The Act imposes a twenty-day deadline on companies to perfect the security interest, commencing from the day after the security agreement is made. Failure to comply with this deadline may result in invalidity if a liquidator or administrator is appointed within six months of creation of the security interest.

Implications for business

The provisions of the Act will affect any business that provides credit to customers on non-land securities.

Financiers will need to review and modify security documents and procedures relating to charges, mortgages over all property other than land, vehicle and equipment leases and hire purchase agreements. Manufacturers & suppliers will need to register their rights in relation to commercial consignments and retention of title arrangements as they will constitute security interests.

The Act also creates various risks for businesses if they are unaware of their obligations. For example:

  • if another person holds a registered security interest in the assets over which you have an unregistered security interest, the registered interest will take priority over your unregistered interest. The registered party may be able to deal with the assets without reference to your interest;
  • if the counterparty to a contract deals with the assets in the ordinary course of business, such assets can be disposed off and your interest extinguished, even if you hold title to the asset. However, this is subject to certain exceptions listed in the Act;
  • if the counterparty ends up going into insolvency or administration, you may cease to be a secured creditor and end up being only an unsecured creditor of the counterparty.

To achieve the highest priority, the secured party must perfect its security interest by control (if the asset is capable of control), by possession (if practicable), or at least by registration.

How can PLN assist?

PLN has experience across the Pacific and New Zealand with similar legislation and can offer important insights as to how best to be prepared come May 2011. We can assist with:

  • identifying registerable transactions and affected assets;
  • reviewing standard terms of supply, as well as any other arrangements affected;
  • advising on registration of security interests and obligations post PPSR registration;
  • redrafting security documents; and
  • preparing new policies.


1. For the purposes of this Act, the Migration Time is:

  1. the start of the first day of the month that is 25 months after the month in which this Act is given the Royal Assent; or
  2. an earlier time determined by the Minister.

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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.

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