What is the PPSA?
The Personal Property Securities Act 2009 (PPSA) is a federal law in Australia that governs the creation and registration of security interests in personal property. The PPSA creates a comprehensive framework for the creation, registration, and enforcement of security interests in personal property, which includes all types of movable property, such as goods, crops, and intangible property, such as intellectual property.
What is a security interest?
A security interest is an interest in personal property that is taken as security for the payment of a debt or the performance of another obligation. Under the PPSA, a security interest can be created in personal property by a written agreement, such as when a supplier takes a security interest in goods that it supplies to a customer on credit.
What is PPS registration?
The registration of a security interest on the Personal Properties Securities Register (PPSR) gives the secured party priority over other creditors and helps to avoid disputes about who has priority over the personal property in the event of default.
One of the key features of the PPSA is the requirement that security interests be perfected in order to have priority over other security interests in the same property. Perfection refers to the process of taking steps to protect the security interest, such as registration on the PPSR, and can be either automatic or conditional.
Why is it important to register?
The PPSA also provides for enforcement of security interests, including the right of a secured party to seize and sell personal property to recover the debt owed to it. In order to enforce a security interest, the secured party must give the borrower notice of default and an opportunity to cure the default before taking enforcement action.
It is important to note that the PPSA has a significant impact on the financing of goods and services, as well as the way in which personal property is used as security for debt. Businesses and individuals who regularly use personal property as security for debt should be aware of the requirements of the PPSA, including the need to register security interests and the potential impact of bankruptcy and insolvency proceedings.
If you would like advice regarding PPSA requirements and whether they affect your business, contact us today.
