The Personal Property Securities Register (PPSR) and the Personal Property Securities Act 2009 (PPSA) came into effect on 30 January 2012, representing a significant change in the law relating to security interests in personal property.
The PPSR is the new centralised online register created for the recording of security interests in personal property. Details of security interests in personal property can be both registered and searched using the PPSR.
The PPSA creates a set of rules relating to the priority of security interests on and over personal property. Importantly, land is not personal property under the PPSA and the PPSA does not apply to interests in fixtures.
Under the PPSA the secured party is responsible for both registering the security interest and amending the PPSR when there is a “change” to a security interest. As the PPSR is an online register, there is no mandated form of release or of amendment to security interests registered on the PPSR.
How does the PPSR effect Conveyancing?
In terms of conveyancing matters, the PPSA does result in some significant changes. For example, for the sale of a property which includes a furniture package, a purchaser may request evidence of the release of the furniture from the security interest at settlement. It is difficult to provide the amendment of the registration unless online facilities are available at the settlement venue.
To assist with the logistical issues, it is common for undertakings by the secured party/ the secured party’s solicitor to be provided at settlement. The Australian Bankers’ Association and the Australian Finance Conference have prepared a ‘Release and Undertaking to Amend Registration’ form as a suggestion for what can be provided by a secured party. Whilst use of this form is desirable, especially in the early stages of the PPSR, there is no requirement for an undertaking or this form of document to be provided.
It is important that when acting for a client in the purchase of a property which includes chattels that either the registered security interest is amended at or before settlement to ensure that the purchaser obtains unencumbered title to the chattels upon settlement.