Are you ready for the Personal Property Securities Act 2009?
The Personal Property Securities Act 2009 legislation for Australia introduces a single national system for registering security interests in relation to personal property. The new regime is arguably the most significant change affecting businesses since the introduction of the GST in 2000.
The legislation comes into effect on Monday 30 January 2012.
From that date the new regime will apply to most transactions which involve secured loans, hire purchase, chattel mortgages, leases exceeding 1 year, and retention of title in relation to “personal property”
2. How many months do I have to register existing securities?
Businesses and individuals have 24 months from the Act’s commencement date to register existing securities. However, in many cases it will be prudent to effect registration immediately to ensure the relevant interest is recorded and thereby brought to the notice of others who could claim an interest in the asset. Unregistered securities may have less priority against competing interests.
3. How long do I have to register new security interests?
New security interests arising from 30 January 2012 onwards will need to be registered within 15 days. Failure to do this may result in loss of priority or difficulties realising the security.
4. Will contractual retention of title arrangements still be effective?
Contractual retention of title arrangements will no longer be effective. Registration is required to “perfect” security interests. If a company goes into liquidation, unperfected security interests will be subordinated to all perfected (registered) security interests. This means the unregistered “secured” creditor loses its priority and may be relegated to the status of unsecured creditor.
5. What if I’m owed money that is secured against assets?
If you are owed money which is presently secured against chattels or other assets, you should take steps to ensure your security interests are protected. Many businesses supply goods on credit subject to “retention of title” provisions in the credit agreement. Such provisions are now virtually worthless unless perfected by registration, and where appropriate any continuing interest in goods supplied should be promptly registered.
6. What if I’m buying a new property or advancing money?
If you are buying property or advancing money against property, it is essential to search the new register to ensure the property is not already subject to a perfected security interest.
Personal property is any kind of tangible or intangible property other than real property (land, buildings and land fixtures). Examples of personal property, that are eligible for registration under the Personal Property Securities Act 2009, include cars, boats, inventory, livestock, art, machinery, crops, contract rights and intellectual property such as copyright, designs, trademarks and patents.