What is this PPSR I keep hearing about?

In 2012, the Personal Property Securities Register (PPSR) commenced. This is a new, national register of security interests over assets, which replaced multiple Commonwealth and State registers. Security interests over assets such as vehicles, stock or equipment (i.e. almost all types of assets other than land) are now registered on the PPSR and are subject to new laws.

How does this affect you?

All businesses in Australia are now effected by the PPSR, whether by way of security interests being registered against them (eg. as part of bank loans or supply arrangements); or when they are registering security interests in their favour against customers (eg. securing retention of title clauses for supplied goods or ownership over plant and equipment leased to others).

If you fail to register your security interest against a customer, this could cause you to lose your priority secured position, as against other creditors who have a registered secured interest, in the case of your customer becoming insolvent. Here are a few common examples:

Retaining title to goods and materials supplied

Many suppliers sell goods on the basis that the customers do not own the goods until there has been full payment. Under the PPSR, such retention of title clauses will need to be registered by the supplier in order to give it full legal protection. Without PPSR registration, a supplier's contractual right to retain ownership and take goods back in the event of non-payment and insolvency can be overridden by, for example, a bank having a registered security interest against all the stock in the possession of the customer. In this case, the bank would be able to hold onto the supplied goods irrespective of the supplier's retention of ownership clause.

Equipment lease agreements

Where plant and equipment is leased, the terms of the lease need to be adjusted and security interests need to be registered. If the lessor does not register the security interests over its items of plant and equipment, then the lessor will risk losing the item of plant and equipment if the lessee becomes insolvent and a liquidator, administrator or secured other creditor has access and takes possession of the plant and equipment.

Hints and Traps

The following are some common issues with the PPSR which you should be aware of:

  • In searching the PPSR, ensure that you separately search the company name, ABN and business name as the PPSR has some existing transcription errors from previous registers.
  • When getting a security interest discharged, note that this is not a paper-based process and will need to be electronically done by the security interest holder (e.g. the bank). A paper discharge undertaking provided to you by the security holder will have no effect on the PPSR and you should ensure that the security holder has electronically lodged the release.
  • Make sure that all your security arrangements are recorded in writing, as Security Agreements, as this is the basis of any PPSR registration.
  • Once your Security Agreements are in place, you should ensure that you have smooth processes for PPSR registration as there are strict time limits which apply.

If you have any queries on the PPSR or what your business needs to do, please feel free to give Mitchell Zadow a call on (03) 8561 3318.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

For further information contact  
Mitchell Zadow

Mitchell is the Managing Principal of our law practice.

He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate. For further information, contact Mitchell on his direct line (03) 8561 3318.


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