When buying, selling, leasing, or hiring goods you may be putting your business at risk without even knowing. The PPSR is important in providing answers such as whether the goods you are buying have money owing on them, or whether you will get your money back if your customer goes broke.
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What is the PPSR
The Personal Property and Securities Register (PPSR) is a national register introduced in 2012 that consolidated Australia’s more than 35 security registers. The PPSR applies to security interests attached to personal property, so land and fixtures to land do not apply. As a result, it acts as a noticeboard for security interests in almost anything of value.
If you’re a business or lender, the PPSR allows you to register your security interest over personal property. As a result, having a registered interest over personal property makes you a secured party.
Secured parties, people looking to buy, and anyone else with an interest in the property can search the PPSR to see if there is a registered security interest over the personal property. The result of this is that if you purchase property with an attached security interest, it is possible for the secured party to repossess it.
In the event of liquidation or a debtor defaulting, the PPSR will determine who has priority for secured creditors. With a secured interest in this scenario, you will be in the best position to get your goods, or its value, back.
Examples of Personal Property
The PPSR applies to all personal property, regardless of whether it’s tangible or intangible. Furthermore, property can also be new or second-hand, and owned by businesses or individuals. Some Examples include:
- Cars, boats and aircraft
- Shares, cash or cheques
- Artworks and equipment
- Patents, debts, banks accounts, copyright, commercial licenses, and intellectual property
- Crops and livestock
How Does the PPSR affect businesses?
The PPSR serves as a risk management tool to protect your business and its goods and assets. Without an interest you could miss out if your customer goes broke before your goods are paid or returned. Additionally, the PPSR makes others aware if you have an interest over the goods you are supplying.
The PPSR is also important in helping your business make informed decisions when buying goods or acquiring personal property. Also, the register can help you check if the good or property you are buying is free from financed debt and safe from possible repossession.
Traditional contracts with retention of title clauses may not protect you in the event your customer defaults on payments. Retention of title clauses mean the title of goods remain with you until they are paid in full. Contracts do not stack up against registered interests when you need to rely on it. If someone has a registered interest, they will have priority over you should your customer default or go broke. Therefore, it’s important for your businesses to back up contracts with a registered interest on the PPSR as soon as possible. Having no priority interest can result in you receiving little to nothing when trying to receive your goods or money back.
Do you need the PPSR?
The following are examples of business activities that can be assisted by utilising the PPSR:
- Selling goods on ‘retention of title’ terms
- Consign goods to others
- Hire, rent or lease out goods for terms longer than 2 years
- Buy or sell valuable second-hand goods or assets
- Want to raise finance using stock or other assets as collateral
- Work as an adviser to clients who conduct these activities
It’s more than likely that you are conducting your business in one of these ways, so it is well worth utilising the PPSR and considering how it may protect your business.
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