Why register a security interest on the PPSR?

Businesses can improve the way they manage credit risk by registering their security interest in the goods they supply or lease on the PPSR. If you do not register your security interest and a debtor goes into bankruptcy or is placed into liquidation, your position will be like that of an unsecured creditor. Secured creditors will be ahead of you when payments are made or assets distributed.

The Personal Property Securities Act 2009 (Cth) contains rules for determining priority between security interests in the same collateral. It is therefore important to register your security interests as soon as possible. 

What is personal property? 

Personal property is given a wide definition by the PPS Act. With a few exceptions, it covers any property someone can own, other than land, buildings and fixtures. 

Personal property includes: 

>> goods
>> plant and equipment
>> cars, boats, planes
>> crops, livestock
>> art
>> licenses, shares, accounts receivable, contract rights, and
>> intellectual property

What is a security interest?

When you buy personal property on hire purchase, or use personal property as security for a loan or another type of credit providing transaction, the transaction creates a security interest in the personal property. A security interest is an interest in personal property provided for by a transaction that secures payment or performance of an obligation.

Who are the parties involved in the creation of a security interest?

Usually there are two distinct parties involved in the creation of a security interest:

>> the secured party (creditor, lender, supplier or lessor), and
>> the grantor (debtor, borrower, supply customer or lessee).

What are some of the common business transactions that can create a security interest?

There are many different kinds of business transactions that can create a security interest. The list below provides some common examples:

>>  a fixed charge
>>  a floating charge
>>  a chattel mortgage
>>  a conditional sale agreement (including an agreement to sell subject to retention of title)
>>  a hire purchase agreement
>>  a pledge
>>  a trust receipt
>>  a consignment (whether or not a commercial consignment)
>>  a lease of goods (whether or not a PPS lease)
>>  an assignment, or
>>  a transfer of title

Retention of title

Retention of title is an important example of a transaction that creates a security interest that will affect many small businesses that supply or receive goods on credit. You can visit the New rules page on the PPSR website to find out more on retention of title.

What is collateral?

Collateral is personal property that is subject to a security interest. When personal property is offered as security in a lending or leasing transaction, the PPS Act refers to it as collateral.

All collateral is considered to be commercial if it is not consumer property. Visit the For consumers page on the PPSR Website for information about consumer property.

As a business user of the PPSR, you would most likely need to register security interests in commercial property on the register. 

The PPSR and commercial collateral

The PPSR has arranged commercial collateral into nine categories or classes. Before making a registration it is advisable for you to consider what type of commercial property best describes your item.

The nine collateral classes are:

>>  agriculture - for example crops and livestock
>>  aircraft
>>  all present and after-acquired property
>>  all present and after-acquired property, except
>>  financial property
>>  intangible property - for example intellectual property, financial property
>>  motor vehicles
>>  other goods - for example art works, office machinery
>>  watercraft

Each registration you make must only relate to a single collateral class.

This article has been taken from the PPSR Website  www.ppsr.gov.au

See www.ppsr.gov.au for more information and to access the PPSR.

To find out how to register on the PPSR click here