The 30th of January will mark the seventh anniversary of the application of the Personal Property Securities Act 2009 (Cth) and the implementation of the Personal Property Security Register (PPSR). The PPSR is a fundamental part of the Personal Property Securities Act (PPSA) which acts as a single national online register recording details of registered security interests and company charges. The register acts as a noticeboard of held security interests.
Registrations of serial numbers and consumer property only have a duration of 7 years, as we approach the 7th anniversary of the register, registrations made in 2012 will expire automatically this year unless they are renewed.
For organisations and or individuals who have made registrations on the PPSR that are for a period of 7 years (or less), it is imperative to review and monitor when your registrations will expire. If you are unsure as to when your registrations expire, the Australian Financial Security Authority will provide you with a report that identifies all registrations in favour of your secured party that are due to expire.
Failure to renew registrations in the PPSR when they expire can result in losing priority position and or the security interest could vest in the grantor if the grantor enters into administration or liquidation within 6 months of that new registration. To avoid such consequences, it is imperative that registrations are renewed in advance of their expiration, failure to do so will require a new registration to be made in the register.
What is the PPSA?
The Personal Property Security Act sets out the rules for security interests in personal property. It is a Federal Act and applies solely to personal property (personal property is the description given to all property other than ‘real property’, being land and buildings).
The PPSA provides uniform rules for;
- Creating valid and enforceable security interests over personal property;
- Setting the priority between competing security interest;
- When a security interest can be enforced after an insolvency event;
- Circumstances where personal property is acquired free of security interest.
What is a Security Interest?
A security interest is an interest in an item of personal property that secures payment of a debt or other obligation, regardless as to the type and form of the transaction. Such security interest usually arises as a result of a binding contract or agreement between parties. A secured party is a person who holds a security interest for the person’s own benefit or for the benefit of another, or both. A grantor is the person who provides the secured party with a security interest. A security interest is made enforceable through the execution of a security agreement.
If you need any assistance regarding expiration of registrations of a security interests, or wish to enter into a security agreement and register an interest on the PPSR please contact Daniel McDonald on (03) 9070 1107.