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The Personal Properties Security Register (PPSR)... Transitional Period ending 31 January 2014.

Tuesday, 14 January 2014    Accounting

Are you buying valuable second-hand items?

Before you buy  check the PPSR to see if valuable goods such as that used car, stock, equipment, machinery or boat is debt-free and safe from repossession. Doing a search before you buy is low cost, easy and immediate.

Are you selling to your customers on terms, such as retention of title, or leasing out valuable goods ?

Registering your interest in valuable goods on the PPSR can help you claim them back if your customer doesn's pay or becomes insolvent.

The Personal Properties Securities register (PPSR) is an Australian Government National online register of security interests in goods and other personal property which is regularly used by buyers, sellers and financiers.

What does this mean for you and your business?

The Personal Property Securities Act 2009 introduces substantive changes to the laws that govern security interests in personal property and the methods used to protect them. Merely taking a security interest over another person's property or retaining title to your own property will no longer be adequate to protect your interests. In many interests you will need to take the additional steps of registering that interest on the PPSR.

The PPSR transitional period will end on 31 January 2014. The consequences of not protecting  your interests before the end of the transitional period can be significant.

If you have been granted a transitional security interest, you will need to ensure your interests will continue to be protected beyond the end of the transitional period. Examples of these types of transitional interests include :

1. leasing and hiring arrangements

2. share and unit mortgages (particular those granted by individuals)

3. retention of title supplies

4. equipment or chattel mortgages

5. charges or mortgages granted by individuals (including all asset charges), and

6. security interests granted by foreign entities where the security is located in Australia.

When the transitional period ends, all of the provisions of the PPSA (including the priority, extinguishment, enforcement and insolvency rules) will apply to your transitional security interests. If those interests are not registered (or perfected by another means), you risk :

1. Your security interests ranking behind another creditor even though your interest was created first. This will be the case even though you retain ownership of the secured property; and

2. Your security interest vesting in (transferring to) the person or entity who granted you the interest if they become solvent. If this happens you will only have rights as an unsecured creditor. Where you lease or retain title to property, the vesting rules will result in your title to the property transferring to the insolvent entity.

For further information visit www.ppsr.gov.au