Personal property securities reform

The Personal Property Securities Act 2009 (Cth) (PPSA) introduces the most comprehensive and controversial reforms ever to the creation, priority and enforcement of personal property security interests in Australia.  The PPSA at this stage is expected to commence on 30 January 2012.

Personal property is essentially any form of property that is not land or fixtures to land.

The PPSA moves security interests in personal property from a title system to a registration system on the new national PPS Register (PPSR).  The PPSR amalgamates 40 different registers into a one-stop-shop noticeboard of all registered security interests in personal property.  It will be accessible online 24 hours a day and updated in real time.  Registration and search fees are not yet finalised but are expected to cost around $7.

Will you be affected by the PPSA?

The PPSA applies to all security interests created in personal property, including:

• provision of goods on credit, consignment, bailment or a retention of title basis;
• leasing of goods;
• hire purchase arrangements;
• fixed and floating charges over personal property; and
• chattel mortgages.

Non-compliance may result in your security interest being defeated by another higher priority security interest or a third party purchaser/lessee being able to take free of your security interest.

So don’t be caught out - anyone that deals with security interests must start implementing changes now to ensure compliance with the PPSA.  For example if you supply goods on a retention of title basis, under the PPSA your terms of supply must instead create a security interest over such goods for you to then register on the PPSR.

What should you do now?

It is critical that your business carries out these essential steps:

1. Review your business processes, procedures and arrangements and consider what will be affected by the PPSA.
2. Discuss with your business advisors what changes need to be implemented to ensure compliance with the PPSA.
3. Update your documentation, contracts, forms and processes for the search and registration of security interests on the PPSR.
    

Australian Business Lawyers & Advisors can help your business prepare for the PPSA.  Contact Marcus Bagnall on (02) 9458 7005 or by email at marcus.bagnall@ablawyers.com.au to find out more about how the PPSA may impact your business and how to protect your security interests in personal property.