Personal Property Securities Act 2009

The Personal Property Securities Act 2009 (Cth) ("PPSA") will have a significant impact on the taking, registration and enforcement of security over almost all kinds of property, except land.

The PPSA overturns fundamental property law concepts including the long held concept of legal title.  A complex set of rules will now govern the enforceability of security interests.

The PPSA commencement date is set for 30 January 2012 (after a number of false starts) and will affect a great many businesses in Australia.

How may the PPSA affect you?

• Fixed and floating charges – your existing charges registered with ASIC will be "migrated" to the PPSA Register ("PPSR") – a single national internet-based register available 24/7. The concept of fixed and floating charges will be replaced under the PPSA by "security interests over non-circulating assets" and "security interests over circulating assets" respectively.
• Retention of title ("ROT") – any supply of goods by you under a contract/purchase order that contains a ROT clause will need to be reviewed and may require registration as a purchase money security interest ("PMSI"). Under the current system goods supplied under an ROT may be retrieved by you on the insolvency of the receiver of the goods. Under PPSA, unless you as the ROT supplier register a PMSI as a security interest on the PPSR, the goods under ROT may become the property of the counterparty in liquidation and amount to a windfall for any creditors.
• Equipment hire – any equipment lease of more than 12 months may require registration in order to protect the interest which you have in the equipment.
• Serial numbered goods – any lease of serial numbered goods (eg motor vehicles etc) of more than 90 days may require registration in order to protect the interest which you have in the goods.
• Joint venture agreements – interests arising under cross charges and some default clauses in joint venture agreements will fall inside the PPSA regime and will need to be reviewed. In particular, new cross charges will require specific drafting changes to deal with the changes introduced by the PPSA.
• Other considerations – hire purchase agreements, conditional sale agreements, transfers of accounts receivables, confidentiality obligations (amongst others) will also be affected.

Motor Dealers

• A single search of the PPS Register will provide national information so you will be able to find out whether there is any registered debt or other interest in a vehicle in any state or territory in Australia.

• A search of the PPS Register will also create a request for vehicle information from the National Exchange of Vehicle and Driver Information System - NEVDIS.  Depending on the information NEVDIS holds, this will include written off and stolen status information in addition to make, model, colour and other information. Note that there will be no provision for searching or registering an interest by plate or engine number on the PPS Register.  The correct VIN or chassis number depending on the vehicle is essential when making a registration and searching on the national PPS Register because failure to use the correct number will result in an ineffective registration and inability to find the registration on the PPS Register. 

This article has been provided by Cars and Finance Direct ©