PPSR Registrations – what are they and why are they so important for businesses?

What are PPSR Registrations?

The Personal Property Securities Register (PPSR) is an online register of security interests in personal property, such as cars, goods, or company assets. Anyone can search the PPSR to see if there is a registered interest in personal property.

You have a security interest in property if you have an agreement that you can reclaim property if a debt is not repaid to you. For example, secured car loans, hire-purchase agreements for goods, or leases.

Personal property is anything other than land, buildings and fixtures, including:

• Vehicles
• Crops and livestock
• Equipment
• Patents and copyright
• Debts and bank accounts
• Commercial licenses

By registering your security interest on the PPSR, you publicly declare that you have an interest in the property that you have supplied. This means that you will have a legal right to be a priority to be paid or get your goods back.

How do I register a security interest?

Registrations to the PPSR can be made on the PPSR website. A separate registration needs to be made over each security interest you wish to register.

A registration can last for 7 years, 25 years, or have no end date.

Some registrations can only be made for a maximum of seven years. These include registrations made over property to be used by individuals rather than companies, and registrations made using the serial-number of goods, such as cars and boats.

There are different registration fees payable at the time of registration, based on the length of registration.

When do I need to register my security interest?

Registrations on the PPSR should be made as soon as possible. A registration needs to be made within 20 working days of the security agreement being signed by the customer or more than six months before the customer starts insolvency.  If more than one secured party has a security interest in the same property, there are rules about who has priority. The secured party with the highest priority also has the highest claim to the collateral. A failure to register a security interest promptly can result in a situation where a third party’s registration has priority over yours.

You can renew your registration any time before it expires.

You should discharge a registration within 5 working days from the day that you are aware there is no longer a security interest, such as when a deal is no longer going ahead or when the debt is repaid.

Why are PPSR Registrations Important?

Registering your security interest on the PPSR provides you extra protections, including:

• Giving you more legal protection than a written agreement
• Helping you get your goods back if your customer goes insolvent, rather than the goods being sold for the benefit of all creditors
• Giving you priority to get your money back over unregistered creditors if your client goes insolvent
• Allowing an insolvency practitioner to find you by searching the PPSR

Some examples of circumstances where PPSR Registrations are especially important include:

• If you provide equipment or machinery to contractors through a hire purchase arrangement or lease, PPSR registration can, in some circumstances, allow you to retake possession of the goods if the contractor stops paying.
• Registration can help keep you first in line to reclaim or be paid for the goods even if your customer has sold the goods you have an interest in.
• When buying a business, goods or equipment, searching the PPSR will give you peace of mind that there aren’t any other registered interests in the items you are purchasing.

What businesses can do to enforce the security interest after a default?

Generally, you can enforce your security interest, for example, by repossessing your goods, if your customer defaults on the security agreement. It is important to remember that, when enforcing your security interest, you can only get back what you are owed under the security agreement, plus your legal costs. Any amount left over must go to other secured parties and the customer.

If there is more than one secured party with a security interest in the same property, there are rules about whose interest is a priority. The secured party with the highest priority has the first claim to the goods and can seize them from any secured party with a lower priority.

The first step to enforce your interest is to seize the goods from the customer. Where you have supplied goods to the customer, this means physically seizing the goods by a lawful method. Where your agreement covers other property, such as a bank account, license, or patent, seize the goods by giving the customer a notice of seizure.

Once the goods are seized, you can:

1. Sell the goods

You can sell the goods to recover the amount owed to you once you have notified the customer and any higher priority secured parties.

You must sell the goods for market value or a reasonably obtainable amount. The sale proceeds will go to the secured parties in order of priority, to cover the amount they are owed. Any extra goes to the customer.

Selling the goods will end all security interests in the goods.

2. Keep the goods

Keeping the goods means that any security interest in the goods will end, except for any that are higher ranking than your own.

You will only be able to keep the goods if you notify the customer and anyone else with a registered security interest, and that the other secured parties do not object.

3. Redeem the goods

Before you sell or keep the goods, the customer or a secured party can ‘redeem’ them by paying you the full amount they owe you, plus your enforcement expenses. They will then own the goods and you will no longer have a security interest in them.

4. Reinstate the security agreement

Before you sell or keep the goods, the security agreement can be reinstated if they pay you the full amount owed to you, plus your enforcement expenses.

You will then return the goods to the customer, and the security agreement will then continue as if there had not been a default.

What can Coulter Legal do to assist?

Our experienced Corporate & Commercial lawyers are able to assist you with the preparing security agreements to allow you to register a security interest,  registration of and enforcing your security interest on the PPSR.