PPSR – Post Registration Obligations
In recent months we have been busy assisting many of our clients review and amend their terms of trade to ensure they adequately deal with the implementation of the new Personal Property Securities Act 2009. We have also been assisting clients to roll out their new terms to all customers.
At the same time many of our clients are being inundated with revised terms from their own suppliers, requiring their attention to carefully review those new terms to ensure they do not contain any unreasonable or overly onerous provisions.
Given the amount of work involved in keeping on top of the above tasks when we are all already busy enough with day to day operations, it is easy to temporarily forget the very reason we are reviewing our terms in the first place – to allow us to safely and legally register our interests on the PPSR.
The actual process of registering an interest is relatively straight forward and takes only a couple of minutes once you have set up a user account and have established yourself as a secured party group (chargee). We are more than happy to take you through the process step by step as different clients will have different descriptions and data required to be input along the way so please contact us for any assistance in this process.
However, just as important as the registration process, is ensuring that you comply with your post registration obligations.
Upon successfully registering an interest, you should receive by email a verification statement – which sets out the details of the type of security you have taken, over whom and over what type of property.
The Act obliges a secured party to serve on a grantor (the company or person over which you have registered a security interest) a notice in an approved form advising that person or company that a verification statement has been received. The Act does not state exactly what the “approved form” should look like. It is safe to say though that a letter to the grantor, notifying them that you have registered an interest and attaching the verification statement will be more than sufficient to comply with the obligation.
Unfortunately the PPSR website does not yet offer any prompts to a person registering an interest that that service of the above notice is an obligation under the Act. We anticipate that this will catch some businesses out. A failure to comply with this obligation will leave secured parties open to claims for damages by grantors. So if you have not successfully contracted out of this obligation, it is therefore very important that these notices are served promptly after you receive a verification statement connected to the registration of a security interest.
The above is an outline of only one post registration obligation that secured parties should be familiar with. The PPSA sets out a considerable number of other obligations for secured parties. Many of these obligations focus on providing due notice to others who may be affected by actions of a secured party where those actions might relate to collateral (secured property).
We can help navigate through these obligations when the need arises. It is important to keep in mind that a contract may not be the last word on a party’s rights or obligations when it comes to altering or enforcing one’s rights over collateral.
If you would like more information on the PPSR or your post registration obligations, please contact Tim Osborn on 4925 2077.