The Personal Property Securities Register (PPSR) plays a vital role in Australia’s business landscape. It allows purchasers of goods and equipment to ensure they are receiving clear title. It also allows businesses to protect their interest and obtain payment for property they sell, lease or hire. But what exactly is the PPSR and why is it important for your business? We’ve put together a guide below.
What is the PPSR?
The PPSR came into existence in 2012 as a result of the Personal Property Securities Act (PPSA) 2009 and is Australia’s official noticeboard of secured property. It shows whether a person is claiming a security interest in personal property. Personal property essentially includes goods, equipment and other assets except for real property. It’s important to not be confused by the reference to personal property – it’s for businesses as well.
On the noticeboard, you can complete two actions:
- Register a notice to show you have rights over property which secure a debt or obligation that someone owes to you, and
- Do a search to see if someone has registered an interest over property that you want to buy or lease.
There are currently more than 10 million registrations on the PPSR, which reinforces the major role it plays in financial, business and consumer decisions in Australia.
What Personal Property Can be Registered on the PPSR?
Security interests can be registered on the PPSR against the following property:
- Vehicles such as cars, boats or aircraft,
- Crops, cattle and livestock,
- Stock in trade, artworks and equipment supplied on retention of title or consignment terms,
- Other goods, new or second-hand, owned by businesses or individuals,
- Intangible property such as patents, copyright, commercial (not government-issues) licenses, debts and bank accounts, and
- Financial property such as shares, cash or cheques.
Why is it Necessary to Register Personal Property on the PPSR?
Although there is no legal requirement to register your personal property on the PPSR, registering offers your business excellent risk protection should any of your customers not pay or go insolvent. In the context of the PPSR, insolvency includes:
- Bankruptcy for individuals, including individuals operating a business, as a sole trader or partnership, and
- Liquidation, Receivership and Voluntary Administration/Deeds of Company Arrangement for companies.
In the event of insolvency, a party with an unregistered or incorrectly registered security interest may lose their security interest and the property may vest in the Liquidator, Administrator or Receiver. This means your goods may be sold for the benefit of other creditors and you will be treated as an unsecured creditor in respect of your debt. Unsecured creditors are paid after other types of creditors and therefore may not receive any compensation if the individual or company does not have the necessary funds left.
When purchasing goods, it is also necessary to check the PPSR to ensure the goods you want to buy are free from existing loans or finance and safe from possible repossession. For example, someone may try to sell you goods such as a second-hand car without telling you they still have finance owning on it. If you purchase the vehicle, the financier is entitled to repossess the car and sell it pay the secured debt.
How do You Register Personal Property on the PPSR?
Registering your personal property on the PPSR is a single registration with a low-cost fee (<$10), but easy to get wrong. All of the required information must be entered accurately as any errors can void the registration. You will need to ensure you register within the strict time frames and supply the following details:
- ABN or ACN number,
- Secured party details,
- Grantor details,
- Description of collateral, and
- End time for registration.
What is a Secured Party?
A secured party is the individual or organisation who holds the security interest (personal property).
What is a Grantor?
A Grantor is the business or individual (customer, debtor, buyer, lessee, consignee or borrower) who offers the collateral as security.
What is Collateral?
A collateral class is used to identify the goods you are claiming an interest over. Some common classes include agriculture and serial-numbered goods.
How Long Can Personal Property be Registered?
In consumer property or any serial-numbered property, goods can be registered for up to 7 years, whereas all other cases goods can be registered for up to 7 years, for 25 years or for an indefinite period.
How Long do You Have to Register on the PPSR?
You should register your security interest as soon as it’s created. It becomes most important if the company/person in possession of the secured property (the Grantor) enters insolvency.
In these circumstances:
- If a number of security interests are registered over the Company’s property, it can be the first-registered, rather than the first-created security interest which determines priority.
- Your security interest will be invalid if it is not registered more than 6 months before the company/person enters an insolvency appointment. Or, if it is created within 6 months of the insolvency, it needs to be registered within 20 business days.
The Benefits of the PPSR
The following benefits arise from properly registering a security interest on the PPSR:
- It is a low-cost way to claim an interest in personal property,
- Your debt will have priority for payment in the event of a customer entering an insolvency appointment,
- Helps prevent someone in possession of your property from selling it on and not paying you, and
- Helps protect your business from the loss or disruption of a customer’s insolvency.
The Risks of Not Registering Your Personal Property on the PPSR
If you fail to register your security interest in property on the PPSR:
- If your customer becomes insolvent, your rights to property will be relinquished,
- You will lose out to other creditors who did register, as they will be classed as secured creditors, and
- You may lose rights you might have otherwise had to recover goods or proceeds once they are sold or leased to others.
How Can Revive Financial Help?
Worried about a potential customer insolvency or want to better understand how registering on the PPSR can help your business? Get in touch with us on 1800 534 534 to gain some insight.