Holders of security interests over personal properties should record their interest on the Personal Property Securities Register (PPS Register) before 1 February 2014 to ensure that their security interests are enforceable and that they do not lose priority to competing interest holders.
The PPS Register is a register of security interests over various types of personal property. The PPS Register replaced numerous existing Federal and State registers on 30 January 2012. Security interests must be "perfected" to be enforceable and to obtain priority against competing interests. For example, a creditor with an unperfected security interest loses priority to a creditor with a perfected security interest and becomes an unsecured creditor on insolvency of the debtor, even if the unperfected security interest existed before the perfected interest. Security interests are perfected by registration on the PPS Register.
Usual security types such as mortgages and charges are considered "security interests" for the purposes of the PPS Register. Other arrangements which are not traditionally thought of as security interests but which must be registered on the PPS Register include:
- retention of title provisions – where the seller sells goods but retains title pending payment; and
- consignments – where the owner places goods for sale with a third party but retains title.
In both cases, the owner of the goods (and holder of the corresponding security interest) will lose title to another registered security holder or liquidator if the interest is not registered.
Many security interests registered on the existing Federal and State registers are not automatically transferred to the PPS Register. As a result, security interests registered on existing registers, including those on the Registers of Patents, Designs and Trade Marks, will be of no further effect from a security perspective from 1 February 2014. This means that holders of relevant security interests must record their interests on the PPS Register before 1 February 2014 to preserve their security and priority rights. In any case, security holders should register their interests as soon as possible to obtain priority. Note that intellectual property licences are not security interests and do not need to be registered on the PPS Register.
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.