Parties that hold interest in personal property can protect their interest under the Personal Property Securities Act 2009 (PPSA), by registering their security interest against that property on a national register, which is called the Personal Property Securities Register (PPSR) which is administered by the Australian Financial Security Authority.
A security interest means any interest or right in personal property where payment is secured for performance of an obligation. Section 12 of the Act expressly includes an interest in personal property provided for by a fixed charge, floating charge, chattel mortgage, conditional sale agreement, hire purchase agreement, pledge, trust receipt, consignment, lease of goods, assignment, transfer of title or flawed asset arrangement that secures payment for an obligation.
Section 10 of the PPSA defines personal property to mean property other than land or a statutory entitlement that is declared by the statute in question not to be personal property.
The interests that can be registered in personal property includes: goods, financial property, intermediated securities, and intangible property. Intangible property is a catch all category, and examples include accounts, authorised deposit taking institution accounts, intellectual property and licences.
An example of personal property that can be a security interest may be a motor vehicle, heavy mover, household goods, business inventory, leased goods, livestock, a boat, an aeroplane, and even crops such as a tree plantation. The list of defined personal goods is extensive and if an interested party is not sure whether the item can be classed as goods under the PPSA, then legal advice should be obtained promptly.
Once the personal property has been defined it is important to ensure the security interest of a person’s rights or company are protected in the property, and to achieve that, the security interest must be registered on the PPSR and attached to the ‘collateral’ to be enforceable against another party who may also claim interest in that property.
To hold a superior right over a property interest, such as business assets, a car or even a cargo ship, that security interest must be perfected. Registering a perfected interest requires diligence and timely administration processing to complete the same to secure that interest.
There are priority rules with competing interest on the PPSR, which generally include that at perfected security interest has priority over an unperfected interest. The priorities with unperfected interests are in accordance with the date of attachment to that property, and priorities between perfected interest as to the date of perfection.
If the grantor (who is the party that has the charge against them, such as a mortgagor) defaults on payment to a secured party (who is the party that has the security interest, such as a mortgagee), the secured party may seize the collateral from the grantor. There are various rules under the Act that allows the secured party to secure their interest and dispose of, sell, the asset, and procedures set by the Act must be carefully followed.
Protecting an individual’s or company’s right in property under the PPSA through the use of the PPSR requires careful preparation, diligence and action to occur in a timely manner.
It goes without saying that receiving prompt and accurate legal advice is the key to ensuring your legal protection.
The PPSA is there for the security of your personal goods, and it is here to stay, so don’t risk your goods on failing to register or improper registration under the PPSR, get that legal advice to secure your legal rights & interests.