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January 20, 2017
Why You Should Search the PPSR Before Buying Personal Property

Buyers and sellers with a security interest in personal property need to be aware of more than just their individual rights and responsibilities under the Personal Property Securities Act.

It is essential that they have an understanding of how the Personal Property Securities Register (PPSR) operates and what documentation is necessary to register security interests.

What is a Security Interest?

A security interest in personal property is any interest arising from an agreement in which a performance of an obligation or payment is taken as security for a loan or other obligation.

The PPS Act applies to all such transactions, regardless of form, the nature of the debtor or the jurisdiction in which the parties or personal property are located — subject to specified exceptions.

The Personal Property Securities Register (PPSR)

The PPSR is a national register established on 30 January, 2012 to help protect buyers and sellers who engage in online transactions involving personal property (any property not including land or buildings).

For businesses, a simple search of the PPSR will reveal what properties of a contracting party’s assets — if any — are not available to creditors in the event that party becomes insolvent and enters liquidation.

The PPSR is also the only register which determines which security interests take priority over others, and whether or not a security interest is enforceable.

Interests That Can be Registered

Security interests registered on the PPSR includes both physical and intangible assets that may be used to secure a loan, such as:

Motorcycles, trailers, caravans, cars, trucks or boats

Artwork, furniture, jewellery or business equipment

Farm machinery, crops and livestock, as well as

Intellectual property and rights under contract

Generally, a security interest will attach to personal property in one of two ways:

When the grantor does an act which generates the security interest such as by declaring a trust or executing a deed, or

When the grantor has a security interest in the property and value is given.

Why is the PPSR Important?

Buyers looking to purchase personal property can refer to the PPSR for a small fee and find out if what they are attempting to buy has a security interest attached to it.

If so, the person or entity with the security interest will be within their rights to repossess it.

The Consequences of Failing to Register

Failure to register security interests on the PPSR may result in:

The loss of the priority of your interests to another party or parties with competing security interests, or

The unenforceability of your interests should a subsequent interest holder register an interest on the PPSR.

LBH recommends conducting a search of the PPSR before engaging in the undertaking of major transactions or commercial arrangements to ensure you have the most accurate picture of a contracting party’s asset holdings.

For more information, or if you need assistance in conducting your due diligence and would like to secure your commercial interests on the PPSR, contact David Lewis, LBH Partner on