PPSR / PPSA Australia

How Does the PPSA Work?

The Personal Property Securities Act (PPSA) is a piece of legislation that dictates the security interests of personal property which came into effect in 2009. This act intended to simplify security interests and remediate inconsistencies throughout the 70 different pieces of legislation that already existed.

The PPSA introduced a register known as the PPSR (Personal Property Security Register) and required creditors to register a security interest over their property so they would not lose the right to it if the borrower went insolvent.

The PPSR can help protect their security interests and is the only way to protect their security interests, deeming you the “secured party”. Let's say a company sells goods to a customer, agreeing that the company retains title to the goods until the customer has fully paid off what they owe, such as paying off a car.

Well, if the company selling the car has not registered their security over the car with the PPSR and the borrower is no longer able to make credit payments, the car now belongs to the customer because the company did not comply with the PPSR, according to the PPSA.

To avoid this situation, the company needs to fill out the registration on the PPSR form through the government's website, which will protect their security interests for 7 years.

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What Is PPSR?

The PPSR is the government’s online register which dictates who has security over property. A party can register their security over an asset at any point of the day or week and becomes public record.

If a customer becomes insolvent, as long as the company has registered their security over the property with PPSR, then they still own the right to the property. When dealing with registering for the PPSR, whoever registers first is entitled to the security interests. However, this gets messier when discussing different types of securities.

If the customer has financed payments for the goods through the bank, the bank would retain all of the assets unless the company registers for something known as the PMSI (Purchase Money Security Interest). This is a security that takes priority over all other registered security interests, even if you registered your interest on the PPSR last.

When registering you must check a box declaring that your interest is a PMSI. This is important as you will not have an opportunity to change it later and it must be registered within a specific time window. Your security is given PMSI priority when you've lent money or credit to fund all or part of the purchase price of the personal property, such as:

PPS leases
The supply of goods on credit
Secured property loans

What Are the Benefits of PPSR?

Businesses can benefit greatly when they register on the PPSR. You're protected against preferential payment claims that can redistribute your money to other creditors. The PPSR also enforces the retention of the title clause.

While creditors may have a retention of title clause already, it doesn't really protect you unless you're registered with the PPSR and you would be unable to reclaim assets. You'll get priority over all other secured creditors, even banks as long as you register first or have a PMSI.

By registering, small businesses protect themselves against significant loss and debts as a result of customer insolvency. Secured creditors also have additional rights compared to unsecured creditors, such as enforcing legal action or voting at creditor meetings.

What Are the Benefits of PPSR? | Niche Trade Credit

Why Is PPSR Important?

It protects your security interests as a business owner and offers legal protection. Unsecured creditors lose their right to their goods. Secured creditors are only considered so once they have registered with the PPSR, which entitles them to the right of the property and to be paid first if a customer goes insolvent.

Insolvency practitioners also search the PPSR to locate secured creditors so they can get paid. The PPSR grants you protection as well as additional rights over your property. When you register online, the PPSR lets others know that you have security interests over certain goods. Protect businesses and your property by registering with the PPSR today.

Why Is PPSR Important? | Niche Trade Credit

Choose Niche Trade Credit To Achieve Compliance With the PPSA

Understanding the PPSA is difficult enough and figuring out how to comply with the rules is another ball game. Niche Trade Credit can help you understand when and how to register with the PPSR and ensure that you aren’t violating any conditions of the PPSA.

The PPSR offers many resources for those who have been affected by the COVID-19 pandemic, including how the PPSR:

Protects your business when you are purchasing goods.
Enables you to search the register to make an informed decision and ensure that you aren't purchasing something that can be repossessed.

We will ensure that you properly register with the PPSR to protect your security interests if your customers can no longer pay. At Niche Trade Credit, we want to empower businesses to protect their interests from liability.