Lenders should be aware that when taking security in certain
goods with serial numbers in Canada, the rules regarding
registration of financing statements vary across provincial
jurisdictions; a detail that, if overlooked, could impact the
priority of the lender's security interest.
In Ontario, where the collateral includes motor vehicles (as
defined in Ontario's Personal Property Security Regulation 56/07),
including the vehicle identification number will provide the lender
with protections against: (i) purchasers or lessors of a motor
vehicle that is proceeds and classified as consumer goods, and (ii)
purchasers of a motor vehicle classified as equipment sold other
than in the ordinary course of business of the seller.
In some other provinces, the rules regarding goods with serial
numbers are broader and can include goods other than motor
vehicles. These goods are referred to as "serial number
goods" as defined in the personal property security
regulations of some other Canadian jurisdictions. For example, in
Alberta, "serial numbered goods" includes aircraft and
boats; two types of goods not covered by Ontario's definition
of motor vehicle. For serial numbered goods that are classified as
equipment, if a lender chooses not to register the serial number,
the registration is valid; however, the lender will lose the
priority of their interests in the equipment to purchasers and any
other secured party who has included the serial number. In the case
of a serial numbered good classified as a consumer good, the
failure to register the serial number means the registration is
invalid and leaves the registrant unperfected.
As the applicable rules vary from province to province, lenders
should consult the applicable personal property security act when
dealing with collateral that is located in several provinces.
However, as a general rule, it is prudent to always include the
serial number when registering against goods that fall within the
definition of "serial numbered goods" or "motor
Danielle Boyd completed her LL.B. at Dalhousie
University Schulich School of Law.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
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