After some lengthy delays, the PPSA was finally implemented on 30 January of this year.
All pre-existing registers of charges have now been migrated with varying levels of success. Searchers of registered security interests should consult the PPSR website (Click Here) for some known defects in the register which include (among other things) charges not appearing in searches, satisfied charges appearing as unsatisfied and charges being listed via ABN and not ACN.
All security interests created after 30 January 2012 will need to be “perfected” in order to be enforceable against third parties (E.g. other creditors). One of the simplest ways of perfecting a security interest is to register that interest online via the PPSR website. This process takes only a couple of minutes and can vary in cost from a few dollars to over a hundred dollars depending on the length of the registration period.
Some examples of how the new regime is affecting day to day commercial transactions:
1. Whilst land is excluded from the operation of the PPSA, many non-land commercial property transactions will be affected by the PPSA including acquisitions, sales and leasing. Failure to consider the PPSA (either to ensure your interests are registered or to search to ensure no other priority interests exist) may result, for example, in other parties claiming a higher priority interest in preference to you as a purchaser or landlord.
2. Secured parties need to understand the difference between consumer and commercial property when registering security interests and collateral. A perfected purchase money security interest (PMSI) – which is generally the way a retention of title security interest should be registered – has priority over other perfected security interests. However the
PPS Register does not allow you to select the PMSI option when you register a security interest on consumer property, except in certain circumstances (serial numbered goods).
3. The PPS Register will, in most cases, be the only public record that insolvency practitioners need to search nationally upon their appointment in order to determine claims to personal property. Significantly, the failure of creditors to register or otherwise properly perfect their interests will be fatal to their claims of priority in an insolvency administration.
It is critical that all documentation used to create “security interests” post 30 January 2012 are reviewed to ensure they make provision for the operation of the new Act.
For more information regarding the PPSA, PPS Register or if you require any assistance on this issue, please contact Tim Osborn on 4925 2077.