On the commencement of the Personal Property Security Act 2011 (PPSA) on 4 May 2016, many security interests were given a period of temporary perfection to facilitate the transition from the old security registration scheme to the new scheme established by the PPSA and known as the Personal Property Security Registry (PPS Registry). That temporary perfection ends on 31 October 2016, which is fast approaching.
What is a prior transaction?
Under section 119(1)(b) of the PPSA, a prior transaction is a transaction concluded prior to the commencement of the PPSA that would otherwise fall within the scope of the PPSA. Security interests created under prior transactions, if properly perfected, are given a registration start time measured from the date of the commencement of the PPSA, which is the first available start time for a registration under the PPSA.
In order to allow sufficient time to perfect security interests created under prior transactions, secured parties were given 180 days of temporary perfection. Temporary perfection meant that these security interests were enforceable even though they were not registered on the PPS Registry. However, if they are not perfected before 31 October 2016, not only will the temporary perfection status disappear, but any priority benefits attached to them will disappear as well, which could have serious consequences for secured parties.
Security interests created under prior transactions can be divided into two categories:
- interests that were registered on pre-PPSA registers such as the Companies Register and National Court Register;
- interests that were not previously registerable security interests (common examples include leases of goods, hire purchase agreements and retention of title arrangements).
In September 2015, we published an article here which highlighted the need for secured parties to manually re-register their security interests on the PPS Registry before 31 October 2016, or risk losing priority.
How to beat the clock – Register!
Secured parties must audit their loan and security portfolios and ensure that all security interests created under prior transactions are recorded on the PPS Registry before 31 October 2016.
31 October 2016 is fast approaching, so secured parties must act now!