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The Personal Property Securities Act - The first 100 days

On 30 January 2012, the new Personal Property Securities Act (PPSA) became operational. 100 days on, we review the PPSA and some of the salient features of this important new legalisation.


The PPSA has introduced a transformational change to the registration of security interests in personal property.

Modelled on its Canadian and New Zealand counterparts, the PPSA has rationalised the myriad of Commonwealth, State and Territory laws and registers that have until early 2012, governed secured transactions. It has also introduced a single secured transactions system via a national electronic 24/7 register (PPSR).

Some important features of the PPSA

a) The PPSA is a secured transactions system: i.e. transactions that secure advances of credit or money or the performance of other obligations with the fund of assets (known as collateral).

b) The PPSA is a system of priority and NOT a system of title.

Title-based security interests (such as traditional retention of title agreements) may lose priority and may be ineffective as against an administrator, liquidator or trustee in bankruptcy if not perfected (by registration) on the PPSR. This is a critically important concept to understand and an often misunderstood aspect of the regime.

c) The PPSA defines ‘personal property’ very widely to include any kind of property, both tangible and intangible – including company charges, bills of sale, goods sold on retention of title terms, pledges, mortgages, financial assets, crop liens, stock mortgages, intellectual property rights including (registered) patents, designs, trade marks, plant breeders rights and certain licences.

In effect there are many additional forms of ‘personal property’ now contemplated by the PPSA.

The PPSA excludes land, fixtures on land (buildings etc.), water rights, mineral and hydrocarbon licences and other selected mining rights and selected trade licences (fishing and gaming).

d) Under the PPSA, protection of a security interest involves several important steps. These steps may be critical to securing an interest.

Once the parties have finalised an agreement (referred to as a security agreement) and value has transferred (known as attachment), the secured party (i.e. the creditor/financier) must perfect its security interest by registration on the PPSR by providing (amongst other things) the correct collateral and grantor (i.e. the debtor) details. Additionally, if a secured party wishes to obtain the benefit that a purchase money security interest (PMSI) provides, then it must complete the registration within certain time frames.

Great care should be taken when registering on the PPSR as inadvertent errors may lead to a defective registration and a secured party may lose its priority.

Consequences of not registering a security interest on the PPSR

The PPSA is an entirely voluntary opt-in system. It is not mandatory to register security interests on the PPSA and there will be no time limit for registering an interest. However, failure to perfect (via registration on the PPSR) within certain time frames may mean a security interest can be void on the insolvency of the grantor and a secured party may lose priority to its security interests.

PPSA Support

We recognise that the PPSA regime is very complex and requires a significant mind shift. It introduces a wide range of new terminology that will also take some getting used to.

If you need assistance, please contact Susan Reece Jones.

10 May 2012