Major legislative reform: Personal Properties Securities Act

MSI - PPSR logoLegislation set to have significant impact on registration of security interests

The Personal Properties Securities Act 2009 (PPSA) is one of the most significant pieces of legislative reform for Australian business in many years.  There are currently over 70 different Commonwealth, State and Territory Acts and security registers that regulate personal property securities and there are different rules and competing priorities when dealing with security interests.

The PPSA will either consolidate existing registers into one single national register or remove them entirely.  It aims to reduce complexity and offer consistency by providing uniform rules for all security interest in personal property.  It will also provide businesses with peace of mind when transacting with personal property as it will be easier to see if the property is subject to any third party interests (such as retention of title, leases and financing arrangements).

The PPSA is scheduled to take effect in early 2012, at which point a 24 month transition period will commence.

Personal Property – what does it include? Personal property has a broad definition and includes virtually any property which is not real property or fixtures.  It may, for example, include money, goods, motor vehicles and intellectual property.    Exclusions to the PPSA include land, water rights and certain rights or entitlements created by statute.

Personal Property Securities At a high level, personal property securities exist where property is used to secure payment or performance of an obligation regardless of the form of the transaction.

Examples of personal property securities under the PPSA include:

  • Fixed and floating charges
  • Chattel mortgages
  • Conditional Sales agreements (including agreements to sell subject to retention of title)
  • Hire purchase agreements
  • Pledges
  • Trust receipts
  • Consignment (including commercial)
  • Lease of goods
  • Leases of personal property (for a term of more than 1 year)
  • An assignment of an interest in property
  • Transfers of title
  • Finance leases

Why should I act now? Under the new regime, the priority of secured creditors in the event of insolvency will change.  Those who fail to take adequate measures in preparation for the PPSA risk losing any right to property in possession of another entity in the event of liquidation or receiving a greatly reduced return on a security over personal property.

Case Studies – MSI’s experience in New Zealand A local equivalent of the PPSA came into effect in New Zealand in May 2002 and MSI’s New Zealand lawyers have seen the significant impact of the PPSA across a cross section of the New Zealand business community. The following New Zealand legal cases identify the counterintuitive outcomes that may result for parties which fail to take adequate measures to protect their interests – and underline the importance of understanding this major new reform.


What action do I need to take? Businesses will need to carefully consider how they protect any ‘personal property’ which they own or which they have an interest in.

It is recommended that businesses prepare now for the PPSA regime to protect their interests and minimise disruption once it comes into effect.  This may include seeking appropriate advice to assist with:

  • Reviewing trading activities and checking standard terms of supply, financing arrangements and contracts;
  • Identifying the assets which are affected and property which needs to be registered on the Personal Property Securities Register (PPSR) to ensure priority (as in most cases a registered interest will have priority over an earlier unregistered interest);
  • Redrafting standard terms and preparing new internal procedures for registering interests.

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