The Personal Property Securities Act (‘PPSA’) is a federal Act on taking, registering and enforcing security over personal property (which is, generally, all property excluding land). This includes property such as motor vehicles, charges on companies, and on goods where payment has not yet been received.
The Act establishes an online Register where people with interest in personal property will need to register their interest. This will bring together the various forms of register we currently use such as the ASIC registry and each State’s motor vehicle registry into a single online register. This Register commences on 30 January 2012.
The interest that one person may have over someone else’s property is defined in the Act as a “security interest”. The goods that the person may have an interest over is called a “collateral”.
In order to ensure that your security interest is recognised, you must ensure that, in most cases, the interest is conferred in writing and that it is registered. Failure to do so may mean that you lose priority over the collateral or in the case of insolvency you may lose your interest altogether.
An example of what the PPSA will affect is the “Retention of Title” clause (or sometimes referred to as reservation of title, or romalpa clause). These clauses are commonly used by suppliers of goods to retain the title in the goods until payment is made in full by the buyer.
When the PPSA commences suppliers will not be able to retain title in the goods. Instead, title of the goods will pass immediately to the seller upon possession (regardless of whether it has been paid for or not) and the seller will have an interest in the goods until payment is made. However, in order to protect this interest the buyer will need to comply with the conditions set in the Act.
In light of the PPSA, it is extremely important that you turn your mind to:
1. Arrangements you may already have which are affected by the PPSA. Common arrangements that are affected include hire purchase leases, general terms and conditions of trade, and loan agreements. Our commercial & business lawyers can assist you in reviewing the above and ensuring that you do not lose your interest.
2. Future arrangements. If you are a supplier of goods or frequently purchase goods from third parties it is important that you have a security agreement in place to protect your interest. Prime Lawyers can assist you in drafting these contracts.
Call us now and speak with one of our commercial lawyers on (02) 9521 2222. You can also send your enquiry online now and we will call you shortly.