Teece Hodgson & Ward acts for a number of specialised lenders and investors in the property area.
Our expert team of solicitors also regularly advise commercial clients on financing structures and private or business loans.
Why the PPSA is important to businesses
The Personal Properties Securities Act 2009 (Cth) (‘PPSA’) provides a priority regime for registration of security interests over assets other than land. ‘Perfecting’ security interests by registration is a normal, but very important step for businesses engaged in supplying plant and equipment, machinery, stock, good, crops, livestock and a broad range of other ‘personal property’. It is important when selling goods on deferred payment terms, hiring or leasing equipment or supplying raw materials, materials for production, stock in trade, components, crops and many other products or items which fall within the definition of personal property.
The PPSA is relevant to all businesses engaged in the sale, leasing or supply of goods on consignment, where possession of the goods is given to a third party before they have paid for the goods. A ‘retention of title’ clause in a contract for the sale or supply of goods, plant and equipment will not help a supplier if someone else already has an existing registered security over the assets of the customer, or if the customer becomes insolvent.
It is essential for suppliers providing goods and other personal property on payment terms to register their security interests promptly. This can be particularly relevant if a customer enters into insolvency, as only registered securities are likely to receive priority over other claims in insolvency or bankruptcy. Perfecting a security interest by prompt registration also ensures that your interests are enforceable against later registered third party interests. Failure to register may result in a business losing its right to take back, or claim for personal property sold on terms or delivered to the customer, particularly in the event of their insolvency or bankruptcy.
Some securities rank ahead of others – a ‘purchase money security interest’ (“PMSI”) is a specific security over particular goods or personal property and, if registered promptly, ranks in priority to ‘general security interests’ (such as a security described as being over ‘all present and future property’). It is very important to get the details right when registering security interests under the PPSA and also to register within the applicable time limits.
The PPSA generally adopts a ‘first in’ first secured rule in priority disputes involving registered security interests, so ensuring that your registration is not defective and is registered within the relevant time period is important in order to maintain priority and protect your security interests.
How we can help
If you are considering lending funds for a property or commercial arrangement or for more information on protecting your position under the PPSA, contact our experts: