Upcoming Expiry of PPSR Registrations
The Personal Property Securities Act 2009 (Cth) (PPSA) came into force on 30 January 2012 as a means of protecting security interests in personal property. The most notable product of the PPSA was the establishment of the Personal Property Securities Register (PPSR) – a national register of personal property security interests that can be utilised by both organisations and individuals to secure interests in personal property.
The PPSA provides that an interested party can register a security interest for:
- 7 years or less;
- more than 7 years but less than 25 years; or
- no stated end time.
However, parties that have registered an interest in serial-numbered goods (such as motor vehicles, watercraft, aircraft and certain intangible property) may only register their security interest for a maximum of 7 years. In addition, various charges that were previously registered on State, Territory or Commonwealth registers (most notably, company charges previously registered with ASIC) prior to the commencement of the PPSA were automatically registered on the PPSR when it was established. Some of those registrations may have been registered for a period of 7 years from the commencement of the PPSR. Therefore, this newsletter primarily focusses on these interests, and any other security interests that were registered on, or shortly after, the PPSA commencement date for a period of 7 years or less. The importance of which is that these interests will start to expire from 30 January 2019.
What does this mean?
- The consequences resulting from allowing a registered security interest to expire can be severe. Allowing such an interest to lapse will result in it becoming an “unsecured” interest, meaning:
- your interest in the property will rank behind any other interests in the same property that are registered;
- the party in possession of the unsecured property (Grantor) may be able to sell or dispose of that property free of your security interest; and
- a liquidator, administrator, bankruptcy trustee or other insolvency professional appointed to the Grantor may be able to deal with the property free of your interest.
A registered security interest that has expired cannot be renewed, and instead must be replaced with a new security interest, which will (generally) rank behind the interest of any other party that also has a registered security interest over the property. This is important because the priority of security interests determines the order in which creditors are paid out, or are able to recover goods, in the event that the Grantor is in default.
Although this newsletter is focussed on personal property security interests with registrations of 7 years or less, it should serve as a timely reminder to check all security interests and take note of upcoming expiry dates.
If you have registered a security interest over personal property, especially serial-numbered goods, we suggest that you check the date that each interest was registered and duration that the goods were registered for so that you are aware of any upcoming expiry dates.
Once you have ascertained the expiry dates for each of your registered security interests, we suggest that you seek advice on renewing these interests before they expire to avoid losing priority.
Please contact a member of our team below if you have any questions or need advice on renewing your expiring PPSA registration.