The Personal Property Securities Register commenced operation in Australia in January 2011. It marks a change in the way that security interests in personal property (not real property) are registered and affects the way that businesses borrow money, and lease or buy and sell goods. It replaces numerous registers, including the ASIC register of company charges, combining into one single register that is accessible via the internet at www.ppsr.gov.au. Some examples of personal property that can be used as collateral include:
but does not include state based licences, or fixtures to land, or land itself. The legislation also specifically excludes liens, which usually arise at common law on default in payment, and not by prior agreement with the grantor.
In essence, the Register operates like a notice board, where “secured parties” (lenders or creditors) record their “security interest” with “grantors” (borrowers or debtors).
Once registration is effected, a security interest is said to be perfected and will gain priority over other later-in-time registrations. There are exceptions to this rule, most notably Purchase Money Security Interests, which are discussed in the context of Retention of Title arrangements below.
A security interest can be any type of obligation, but is usually an agreement to repay a debt that is secured over collateral (namely the personal property to which the security interest “attaches”). The agreement giving rise to the security interest must be evidenced in writing in order to be registered, so it is not possible to register an interest without the prior agreement of the grantor. Any registration that is considered by the Registrar to be vexatious or frivolous may be removed by the Registrar, and a registration can also be removed by the Registrar at the request of the grantor in appropriate cases.
Security interests may also be perfected without registration if the secured party takes possession of goods. In all other cases, the consequences of failing to register a security interest can be devastating, because if the grantor goes into liquidation and the security interest is not registered, the interest vests in the grantor. As a result, any title to the goods you supply to another company becomes meaningless – if you sell the goods on credit to another business that then goes into external administration, and there is an unregistered security interest, you will lose the goods.