Personal Properties Securities Act – Why Should I Care?


Have you bought or sold a car or are you considering doing so? 

Do you operate a company that has given a charge against company assets to a creditor? 

Did you have a hire purchase or lease agreement for a vehicle, plant or equipment prior to 2012? 

Are you currently leasing a vehicle, plant or equipment to or from another party? 

Do you rent a property that has fixtures in it that belong to the landlord?

Have you lent or borrowed money for the purpose of buying personal property?

If the answer is yes to any of these questions then it may be vital for protection of your interests to undertake a search of the PPSR and register a security interest.


What is the PPSA and PPSR?

The Personal Property Securities Act (PPSA) came into force in 2012 and deals with all forms of personal property securities.  The PPSA creates one register upon which personal properties securities can be listed.  This register is called the Personal Property Security Register (PPSR).   The PPSA incorporates 78 pieces of legislation that had dealt with personal property securities and a variety of different registers including the ASIC register for company charges, REVS register for charges on vehicles and the Office of Fair Trading register for Bills of Sale – 23 registers in total are combined into the PPSR.  It follows models adopted in USA and New Zealand.

The PPSA applies to all security interests created after the Act came into force.  Registered security interests that existed before PPSA were migrated from the register where they had been held (for example, registered charges against companies on the ASIC register) onto the PPSR.

Section 10 of the PPSA states that “personal property” covered by the Act is all property other than land or a right, entitlement or authority that is granted by a Federal or State law and declared not to be personal property.  This means that practically every type of property apart from real estate is defined as “personal property” and is covered by the PPSA.   If more than one party has a legal interest in the same item of personal property then it may be necessary for at least one party to register their interest on the PPSA or in the case of an item of personal property being sold to release a registered interest.

Have you loaned money to purchase personal property or provided personal property on the basis that you will be paid the value of the item over time?  If yes,  then if you do not register a security interest in that personal property on the PPSR you may have difficulty in proving your legal interest in the personal property and may lose the right to either seize the personal property or have first priority to proceeds of sale from the personal property if the borrower defaults on your agreement and/or becomes insolvent.

Are you buying personal property of any kind particularly if it is of some value (for example, a second hand car or boat)?  If yes, then it is essential that you undertake a search of the PPSR to check if any party has a security interest in the personal property you are buying.  If a party does have a security interest in the personal property then you need to ensure that the Seller arranges for the security interest to be released at or before the time that the personal property is transferred to you.  If you do not undertake a search of the PPSR on the personal property you are buying within required timeframes and there is a registered security interest that is not released at the time the personal property is transferred to you then it is possible that the secured party may be able to seize that property back from you and you will be left to try to recover your money from the seller.

Are you selling personal property of any kind?  If yes then it is vital that you undertake a search of the PPSR to ensure you are aware of any registered security interest, disclose the registered interest to the purchaser to avoid the possibility of being in breach of the sale contract and ensure that the party holding the security interest does release its interest at or before the time you receive payment from the purchaser so that you have no ongoing liability either to the holder of the security interest or the purchaser.


A final important point to note is that when the PPSR legislation came in force in early 2012, the Act gave a period of two years for parties who held security interests in personal property prior to the Act coming into force to register those interests on the PPSR.  That two year period ends on 14th January 2014.  During the two year transition period any unregistered security interests that existed prior to January 2012 will be considered to have the same status as a registered security interest, but as at 14th January 2014 if the security interest is unregistered then it will be deemed “unperfected” and will not have priority over a security interest regarding the same item of personal property that is registered on the PPSR.  If you currently have any formal or informal loan agreement, retention of title agreement, lease agreement or other interest in relation to personal property then it is extremely important that you obtain legal advice as soon as possible about whether you need to register a security interest in relation to that personal property.

If you would like further advice or assistance to establish if you do need to register a security interest on the PPSR or if you are considering purchasing an item of personal property then please contact our Alicia Schubert.

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