What is PPSA?
The Personal Property Securities Act (PPSA) is due to commence on 10 October 2011. It essentially replaces all current law applicable to the taking of security over personal property, including replacement of ASIC charges register and REVS (vehicles).
A key feature of the new legislation is the creation of the Register of Personal Property Securities, which is a single national system governing security interests in personal property.
As the October deadline fast approaches, we will be publishing a series of Bizlaws on this very important step forward in Australian securities law.
Will it affect me?
Personal property means almost all property other than real estate, fixtures, water rights and certain statutory licences. Suppliers of credit, goods and services who are unprepared to comply with the PPSA may be left relying on outdated contracts with no priority in respect of their interests in goods.
So what are the changes?
Some important feature of the PPSA are:
- The term “security interest” now covers many arrangements not traditionally considered to be a security interest including:
- retention of title provisions
- leases of goods
- conditional sales
- hire purchase
as well as the usual securities such as mortgages and charges.
- Security interests must be registered with the Personal Property Securities Register in order to enjoy the full benefit of the security. If you do not register your security interest, your claim may be ranked lower in priority than other creditors’ in the event of a default and will not be enforceable against third parties.
- There are complex rules in relation to the creation, priority and enforcement of security interests.
What should I be doing?
If you are a supplier, you need to determine what changes should be made to your procedures and documentation to ensure your security and ownership rights are protected under the PPSA. If you think that you may be affected by the PPSA you should seek legal advice now in order to properly safeguard your business from October 2011.