The Personal Property Securities Act 2009 (Cth) (PPSA) two year transition period ends on 31 January 2014. After this date, the 'transitional protection' given to security interests created before 30 January 2012 (transitional security interests) will no longer apply. If you fail to perfect a transitional security interest you risk losing priority to, and/or ownership of, items of personal property which were covered by those transitional security interests.
Do you have a security interest?
A security interest is an interest in personal property such as motor vehicles, aircraft and livestock (interests in land are specifically excluded) that secures payment or the performance of an obligation. Some examples include lease and hire purchase arrangements, retention of title provisions, certain kinds of consignment and conditional sale agreements.
What happens if you are not protected?
The consequences of not perfecting your security interest are potentially significant as:
- you risk losing priority in the property to another party with an interest in the same property; and
- your rights may be reduced to those of an unsecured creditor.
What should you be doing?
Three practical steps you can take to protect yourself are:
- Carry out a review of existing security interests
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Where you are relying on transitional protection for interests such as retention of title provisions or long term leases of personal property entered into before 30 January 2012, this transitional protection will cease on 31 January 2014.
We recommend that you carry out a review of your existing security interests immediately to identify any transitional security interests which may need to be perfected before the transition period ends.
- Check if pre-existing security interests have been correctly migrated to the PPS Register
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While some transitional security interests, such as those on the ASIC register of charges, were registered automatically on the PPS Register as part of the migration process it is possible that some interests were not migrated correctly.
We also recommend that you check the PPS Register to ensure that all the security interests that you believe you are entitled to are registered and that any interests registered are attributable to you. You can do this by undertaking the 'find and claim' process. This is a transitional process set up by the Registrar to allow parties that are properly entered onto the PPS Register with a Secured Party Group to identify the electronic data that has been electronically migrated and 'claim' it as their security interest.
You then need to review the particulars contained in each migrated registration to ensure they are correct and complete. Any errors on the PPS Register can be corrected as part of this process.
- Perfect any transitional security interests on the PPS Register by 31 January 2014
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In most cases the best way to perfect a security interest is by registering the security interest on the PPS Register. All PPS registrations are done online. To register a security interest you will need to know:
- particulars of the grantor;
- particulars of the secured party who has been granted the security interest;
- the description of the property including a serial number if required;
- the class of property;
- the nature of the security interest claimed (if the interest is a purchase money security interest or PMSI);
- the end time for registration (how long does the registration need to last for); and
- any other matters prescribed by the regulations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
