The new Personal Property Security regime commences on 30
Some businesses are not ready, but Gadens has the solution.
If your business does any of the following, it needs to amend
its transaction documents, get a good understanding of the PPS, and
develop systems for searching and registration.
Affected businesses include:
real estate lenders who take security over company title home
commercial property finance real estate lenders;
lessors of operating leases, finance leases, and hire purchase
landlords who lease chattels (i.e. goods which are not
fixtures) with real estate; and
businesses which sell goods on a deferred payment basis.
Affected businesses need to urgently take the
establish one or more Secured Party Groups
find and claim migrated securities (i.e. that is charges that
are registered on the old registers such as REVS, bills of sale,
ASIC registered charges);
amend security documents.
Develop processes for:
full releases; and
sending notices of verification statements.
identifying any security that your business takes other than
real estate. Remember leases, hire purchases, finance leases and
retention on title transactions create a security interest. If you
ever, as part of your business, part with possession of your
property, you may be affected by the PPS regime. This is because
possession of property now may give better rights to property than
being the owner.
How important is this?
The degree of change is graphically demonstrated by some cases
in New Zealand (which has similar, but not the same
In one case, Portacom leased portable buildings to NDG Pine
Limited. Portacom did not register the lease on the PPS register.
NDG granted a General Security Agreement (GSA – the
replacement of a fixed and floating charge) to HSBC. HSBC
registered the charge on the PPS register. Subsequently, a receiver
HSBC's registered security interest had priority over
Portacom's owner and so HSBC could sell the portable
buildings and retain the proceeds. This is a graphic example of the
owner losing title to goods. This is a fundamental change to the
way the law operates in Australia because until now, in the vast
majority of cases, the legal owner of property could come and claim
back its property from third parties.
Another example in New Zealand occurred when Glen Morgan Farm
Limited entered a hire purchase agreement to purchase a stallion
'Generous'. Generous was repossessed after three
year's possession by Glen Morgan. Even though the lessor
had repossessed the horse, when Glen Morgan went into receivership,
the court found that despite the lessor having legal title to
Generous, this was not relevant as the interest of the owner was
not registered and should have been. The result was that Generous
was sold by the receivers for approximately $2 million.
Are you PPS ready? Gadens can provide the solutions now.
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.
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