January 6, 2020
There is a misapprehension that having title to, or an interest as owner of, personal property entitles that owner to register a security interest on the Personal Property Securities Register (PPSR). This is not always the case.
Owners of personal property should be aware of when they do have an interest in personal property which is registrable on the PPSR to avoid any disputes and also to ensure that they are taking appropriate steps to protect the interests that they do have.
Owners should be aware that:
- Registering a security interest on the PPSR does not give rise to a security interest. A security interest must exist (or the secured party must have a belief on reasonable grounds that they have, or will have, a security interest) in order for the secured party/owner to be entitled to register on the PPSR.
- Registering a security interest on the PPSR does not give any additional rights in the personal property and does not establish any ownership rights.
- Registering a security interest where there is no security interest can lead to penalties being enforced.
- Registering on the PPS without a security interest can result in the registration being discharged by the owner or by the Registrar.
registration of security interests:
A security interest under the Personal Property Securities Act 2009 (Cth) (PPSA) is defined to be:
…an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property).
This is in addition to the deemed security interests also set out in section 12 of the PPSA.
With such a broad concept of a security interest, careful consideration is needed to determine whether a security interest does arise or is granted in each particular circumstance.
If you do have a security interest which is registered on the PPSR, you will still need to ensure that there is sufficient supporting evidence of that security interest and that the documents supporting or evidencing the security interest are properly stored.
This is to ensure that the documentation is readily available should it be needed to establish that a security interest:
- was, at the time of registration, in existence or there was a belief on reasonable grounds that the security interest would be granted; and
- continues to be in existence and the registration should be maintained – this is because a grantor could take a position that a security interest is no longer in existence and the registration should be discharged from the PPSR.
how can we help you?
McInnes Wilson Lawyers can assist with:
- Preparing documents to evidence security interests.
- Reviewing documents which are to be, or have been, relied upon to register a security interest on the PPSR and advising whether a security interest has arisen.
- Reviewing registrations on the PPSR to ensure that they properly reflect the security interest which has been granted (to avoid the risk of a security interest being defective).