PPSR: Know Why it’s Important to Protect Your Security Interests
The Personal Property Securities Act 1999 produced the Personal Property Securities Register. This is the registry in which a creditor may register a security interest against personal property of the debtor. Besides items exempted such as lands and large ships, the PPSR is where particulars of security interests in personal properties may be registered and searched.
Once the registry is completed, these registrations may be searched by individuals with interests or potential stakes in a property. To fully comprehend this process and its importance, let’s have a look at the following questions:
Why is security interests registration important?
Before tackling the importance of security interests, let’s first acknowledge the term security interests. In situations where you purchase personal property or otherwise utilise the personal property as a security for a loan, your transaction produces a security interest in the personal property.
Creditors may refine the manner they handle credit risk by registering their security interest in the goods they provide or lease. In missing out the chance to register your security interest, when your debtor experiences bankruptcy, you will be placed as an unsecured creditor. As a result, protected creditors will be ahead of you when payouts are rendered or assets disbursed.
What is considered personal property?
While we have been throwing out the term personal properties, let us clearly define what are items considered as such. Aside from land, building, and fixtures, here are items considered as personal properties which you can register in the PPSR:
- Plant and equipment
- Crops and livestock
- Licenses, shares, accounts, receivable, contract rights
- Intellectual property
For a security interest to be produced two substantial parties are required. The first one is the secured party regarded as a creditor, lender, supplier, or lessor. Secondly is the grantor, which are also deemed as debtor, borrower, supply customer, or lessee.
What are samples of business transactions with security interests?
There are various kinds of business transactions which can produce security interests. A few examples of these are retention of title, a consignment whether it is commercial or not, and lease of goods.
In registering your interests, you are informing searchers that you are claiming a stake in the property you are selling on retention of title terms, or have consigned to another individual to resell on your behalf. As a result, the process safeguards your interests in the eventuality that the debtor should default or go bankrupt.