At midnight on 31 January 2014 the PPSA transitional period ends. Any security agreements made before 30 January 2012 which continued to exist after that time and which are registrable on the Personal Property Securities Register lose their temporary priority if they are not registered by the end of the transition period.
The PPS Act generally applies to security interests in personal property located in Australia or if the grantor of the security interest is an Australian entity.
The PPSR does not charge a fee for registration of a Transitional Security Interest (TSI).
Examples of security agreements that may be TSIs not yet registered on the PPSR are:
• some leases and hiring agreements;
• retention of title supplies;
• commercial consignments.
Recent Australian and New Zealand Personal Property Securities Act cases have concerned security interests in personal property as diverse as plant bulbs, guitars, motor vehicles, medical equipment, construction equipment, wool and construction contract take-out rights.
You can register your security interest after 1 February 2014 but its priority over other creditors will not be preserved. This means that another person with a security interest in the same assets which is registered before yours will have first claim to the security in the event that there is default by the person who hired or purchased the goods from you or borrowed money from you to buy the goods (the grantor).
There is also the risk that if the grantor is insolvent or sells the secured assets and your security interest has not been registered, you will lose your security interest altogether.
Langes can advise you whether your commercial arrangements are transitional security interests that should be registered.
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Posted 6th November 2013 by David Jacobson in Financial Services, Personal Property Securities