In brief - Federal government formally announces commencement
The Federal government has formally announced that the new
Personal Property Securities regime will commence on Wednesday 1
Existing rules about property ownership are completely
The changes under the new system will affect everyone.
Think of the structure of the motor vehicle REVs system, but
expanded dramatically to apply to all types of personal property
both tangible and intangible, eg goods, crops, currency,
intellectual property, debts and rights under contracts.
Plus think of a complete change in the existing legal rules
about personal property ownership.
Preparing for the PPS - a few tips
Ownership of personal property
If you sell anything on credit or if anything you own is lent
out or left with someone else and if you want to ensure your
ownership is not lost, DO get a proper security
agreement and register it under the new system. Examples: equipment
left or lent out on work sites; retention of title for goods sold
Indirect rights under contracts
If you enter into any deal where you want or need to be able to
grab personal property or contract rights from someone else,
especially if something goes wrong, DO get a
proper security interest and register it under the new system.
Example: rights to step in and finish a contract where there is
default by another party.
Ask others to avoid minor PPS registrations
DO get contractual promises from people you
deal with that they won't clog up your new public security
interest record with minor registrations. Example: someone sells
you a small item of computer equipment on credit and registers a
security interest but forgets to remove the registration when paid
- the registration will probably not specify particular equipment
and is likely to cause concerns for other people who deal with you
until it is removed.
Make sure you get reasonable carve outs
DON'T sign any contract that has the
"usual" type of clause that says you won't create
security interests, without getting reasonable carve outs.
Otherwise, you will almost certainly find yourself in breach.
You are likely to find that you are subject to lots of
"security interests" as the new system develops. Examples
of things you need to carve out: any "standard" security
to a bank; any situation where you purchase on credit with
ownership not passing to you until payment; and wherever you have
equipment under lease / rental / HP.
Check before buying or leasing
DO carry out complete security interest
searches under the new system before buying or leasing any personal
property in any transaction outside the ordinary course of the
supplier's business of selling or leasing that type of property
OR in any major transaction, where you don't want to take the
risk of someone else having a better claim. Example: buying or
leasing anything that is not the usual type of trading stock in
which the supplier usually deals.
Please note that this is not a complete statement of the rules
about how to acquire property free of security interests. Also,
note in particular that special rules apply for things like motor
vehicles, where security interests are going to be registered by
Make others register their security interests
If someone has assets in which you have a commercial interest,
DO consider making it a condition of your contract
that they also protect themselves (and thus you) by getting and
registering appropriate security interests. Check to make sure they
Use a separate security agreement
In larger deals, to protect confidentiality and make proof
easier, DO consider getting a separate security
agreement document to create security interests, rather than
relying on wording in the main contract. Otherwise you may be
forced to produce your main contract for inspection, despite it
DO include confidentiality agreements in any
document that creates a security interest (even though those
agreements will only be partially protective).
These are just broad commercial tips. 343 sections of the new
legislation and lengthy regulations cannot be summarised accurately
or comprehensively in a few words.
In the years following the global financial crisis of 2008 many Australian investors lost their life savings as financial products failed and the Australian Stock Exchange shed over 3,000 points.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).