Have you heard about the Personal Property Securities Register (PPSR)?
Recent events involving several large building and construction groups have highlighted the knock-on effects to businesses when their customers go into Administration. Now the question is, what can you do to safeguard your assets?
The Personal Property Securities Register; most commonly known as the PPSR, is the official government register of security interests in personal property and is managed by the Registrar of Personal Property Securities.
The PPSR was created as a result of Personal Property Securities Act 2009 that came into operation on 30 January 2012. It replaced many state-based registers, such as REVS and other vehicle registers and the ASIC Register of Company Charges, to form one national register. It is an online noticeboard accessible by the general public 24/7 and is a handy tool to check if personal property such as cars, goods or company assets have security interests over them. Security Interests are agreements where a person can take property if a debt is not repaid. The PPSR is not a register of property ownership.
Who can register?
Anyone can make a registration on the PPSR, including businesses, individuals and organisations. Generally, it will be the person who has the security interest in the property. They are known as the ‘secured party’ for example the lender in a secured loan arrangement, the credit provider in an arrangement where they have provided goods on credit, the lessor in a lease arrangement or the consignor in an arrangement where they have provided goods to sell on a commercial consignment basis.
Why should you register?
If you have a security interest, registering it on the PPSR is optional but it’s an important way to help protect yourself. If you don’t register on the PPSR you risk losing your goods or being left out-of-pocket.
– It provides you with more legal protection
A written agreement may not be enough to protect you, no matter its terms and conditions. To get more complete protection, you may need to register your security interest on the PPSR, not just state it in a contract
– It helps you get your goods back and gives you Priority?
If you don’t register on the PPSR and your customer goes insolvent, (or can’t pay their debts), before they have fully paid you, the property will be lost and the insolvency practitioner may sell your goods for the benefit of all creditors.
By not registering it also means that anyone else who has registered a security interest on the PPSR could be ahead of you in the queue to get their goods or money back if your customer goes insolvent. This is because you will likely be an unsecured creditor, and generally secured creditors are paid first.
– It means the insolvency practitioner can find you
The insolvency practitioner will search the PPSR to find the secured creditors. If you’ve registered a security interest on the PPSR, the insolvency practitioner will be able to include you on the priority list for repayment. So it’s important to keep your contact details up to date on the registration.
What is personal property?
Personal property includes almost everything that isn’t land, buildings or fixtures. Things you can register security interests over include:
- vehicles, boats and aircraft
- crops and livestock
- stock in trade
- new or second-hand goods
- patents and copyright
- commercial licences
- debts and bank accounts and
- shares, cash and cheques.
What can’t you register on the PPSR?
You can’t use the PPSR to register ownership in property or any interest that isn’t a security interest. Just because you are owed payment for something doesn’t mean you can register on the PPSR – there needs to be a valid agreement that creates a security interest. Some personal property is not allowed to be registered on the PPSR, even if you have a security interest in it. This includes:
- land, buildings or fixtures
- water rights and
- government-issued licences such as taxi licenses
If you misuse the PPSR by trying to register your ownership of something or you register when you don’t have a security interest, you may be breaching the law and penalties can apply.
How can I protect my business?
Registering your security interest correctly on the PPSR can protect and give you extra rights in the property it is registered over. It is recommended that you have a written agreement that records any security interests that you register on the PPSR, this can help you avoid potential disputes and enforce your interest against other competing interests in the property, it is especially important if the person who gave you the interest goes insolvent.
You can also make a registration so others know when you have retained an interest in goods you are supplying or leased/rented out goods for more than two years. This means that if your customer doesn’t pay, or goes out of business, you are in the best position to get your goods, or their value, back.
As a business owner you can also use the PPSR to do some research before buying valuable second-hand goods, for example vehicles and machinery. If you buy goods that have money owing against them, they could be repossessed, even after you have paid for them. A PPSR search will help you identify if money is owing against a vehicle or other machinery before you buy it.
Fees for using the PPSR
The PPSR is cost recovered; meaning fees are charged to cover the cost of providing the service, Including searching and registering. A PPSR search costs as little as $2, and a 7-year registration is $6.
You can view the full Fee Table here.
When to register
You should register on the PPSR as soon as possible, as your protection starts from the time of registration. Generally, the earlier you register the higher you will be on the list of secured creditors to repay if your customer can’t pay their debts.
There are also rules in place about the time frames you must register in to ensure you protect yourself and gain additional rights.
Being prepared will make the registration process quick and easy and help you register your security interest correctly. Before you make a PPSR registration, there are a few things you need to know so visit the PPSR website to find out more.