In 2009, the government passed new legislation called the Personal Property Securities Act (“PPSA”) which has only come into effect as at 30 January 2012. It dramatically alters the way we deal with personal property and the way in which security over personal property can be protected.
Under the PPSA, “Personal Property” is any property except land, fixtures to land and some statutory licences. For example machinery and equipment, inventory, motor vehicles, shares, book debts, receivables, stock, crops, trademarks and patents are all forms of personal property. Your family home will not be personal property under the PPSA.
The PPSA will regulate any “Security Interest” in personal property. The scope of what can constitute a security interest under the PPSA is wide and will include a number of interests which the current law does not recognise as security interests. If you do not protect your existing or future rights in personal property you risk losing your security interest in that property.
The PPSA will affect most businesses and individuals. This bulletin sets out some areas affected by PPSA. If you have transactions in any of these areas or interests in personal property, you should urgently seek advice about what steps you should take to protect your interests, if any.
A new register, called the Personal Property Securities Register (“PPSR”) will commence on 30 January 2012. Existing registered security interests are in the process of being “migrated” from the existing Federal, State and Territory registers (e.g. ASIC charges, REVS, Bills of Sale) to the PPSR.
Security interests that are not currently registrable (e.g. chattel leases, bailments, retention of title, commercial consignments, and vendor finance arrangements) have some protection for a period of two years after the commencement date. You should register these security interests on the PPSR within that two year period if your interest in the personal property is to last longer than two years. However, in some cases, there are additional steps that a secured party should take during this transitional period to protect its interest. This will depend on the nature of the interest.
Whilst there are exceptions, it is essential in most instances to register your security interests in order to obtain priority. By registering your security interest you can prevent another person taking ownership of your goods, particularly if they become insolvent (with some limited exceptions). Any delay in registering your security interest or inaccuracy in the registration could be disastrous. New security interests created after commencement must be registered quickly (there are strict time limits for some securities) and in some cases may be registered before the transaction is completed.
We are keen to provide any advice you may need in order to protect your security interests. Unless you tell us about your security interests we cannot provide the advice.
Failure to protect security interests could be expensive. Because of the significant changes to the law, we urge you to think seriously about the matters raised in this bulletin and contact us if you would like further information.