This is a legal guide to outline how you can register a security interest on the PPSR. The PPSR stands for the ‘Personal Property Securities Register’. It is a government run system to allow debts and obligations to be secured against personal property. It’s like a mortgage for personal property instead of land. It’s run as an online registry and a noticeboard. It is open to the public 24/7.
When you Register A Security Interest On The PPSR, it is a notice to the general public that there is a security interest claim. This system allows people to search the PPSR to see if someone has registered a security interest over personal property. This is important to do before buying property or lending money to someone. See how the PPSR applies to businesses here. Further, the Personal Property Securities Act 2009 (PPS Act) is the law behind the PPSR.
1. Create an Account and SPG
The first step to Register A Security Interest On The PPSR is to create a PPSR account and a Secured Party Group (SPG).
A secured party group (or SPG) is different to your PPSR account, and you’ll need to create both an account and a SPG before registering a security interest. A secured party group contains the details of one or several persons or group who has a security interest.
2. Selecting Collateral
There are two types of collateral under the system, consumer property and commercial property. Property used for purposes of carrying out a business, often connected with an ABN, is not consumer property.
After collateral type, the collateral class must be identified. There are many different types of collateral classes. There are four broad categories of collateral class, tangible property, general property, intangible property, financial property.
Tangible Property
Tangible property is a class of collateral which is exactly that, tangible. This means property you can see, touch, feel, drive and break. This covers majority of the interests registered on the PPSR such as cars, motorbikes, watercraft, aircraft and machinery.
Many of these are useful security interests as they have identification numbers and easy to reference. Interestingly, this also covers agricultural property such as crops and livestock.
General Property
The general property category is a broader class of property. It is often used to describe most of the current or future property of an organisation. Interests under this category will use phrases such as ‘present and after acquired property’. The PPSR has two categories:
- All present and after acquired property (All-PAAP) with no exceptions. This is used to describe all of the present and future property of the grantor.
- All present and after acquired property (All-PAAP) with exceptions. It is used when you have an interest over most of the current and future property of the grantor but there are some exceptions.
Intangible Property
Intangible property is personal property that doesn’t have physical form, It covers a broad range of property also. Intellectual property refers to property contained in ideas, knowledge and designs and covers things like copyright, patents, trademarks and designs.
Financial Property
Yep you guessed it, financial property is the category for monetary assets. For example this would cover investment instruments such as shares, bonds, derivatives and more. This can also include documents which guarantee payment such as contracts, promissory notes and bills of exchange.
3. Grantor Details
The third step in registration is obtaining the grantors details. This is not always possible in every scenario. The grantor is the person or organisation who is providing the security interest in the collateral, such as the owner, purchaser or lessee. It is important that the details are correct as any discrepancies may render the interest as ineffective.
4. Application Review, Payment and Confirmation.
After the grantor details have been provided, the application will go under review by the registry. You will need to make a payment at this point also. After this stage, if all the details have been provided correctly the application should take around a week. You will receive a confirmation after the application has been successful.
5. Notify the Grantors
After confirmation you must notify the grantors that a security interest has been registered against the collateral. It is important that they are aware of the change in interests on the collateral.
An Example of when to use the PPSR?
To try and illustrate how the PPSR would work here is an example of when the registry would be used.
Example 1: Adam’s secured car loan
Adam wants to buy a Toyota Hilux but he doesn’t have the money to buy it outright. He applies for a loan from a bank who agrees to lend him the money.
The bank needs to make sure that they will be repaid. To alleviate this problem, Adam agrees to put the car up as security. The bank registers a security interest over the car, making this a secured car loan.
This is a valid security interest. Adam entered into a consensual transaction with the bank to grant an interest in his car to secure payment of a debt.
