Lovely Boats Pty Ltd builds and sells expensive luxury yachts made to customer specifications and order. For the first time, Lovely Boats sells a yacht to Clive, who collects yachts to use for leisure.
It is sold on Lovely Boats' standard terms and conditions, which require 20% deposit in advance, and the balance to be paid within 60 days of delivery.
The terms include a retention of title clause which states: 'until full payment of all sums due under the contract, title to the boat remains with Lovely Boats'.
Lovely Boats insists that Clive signs his agreement to the written terms and the specifications for the yacht before any work starts, which he does.
When the boat is nearing completion, but well before its delivery, Lovely Boats registers on the PPSR by completing the online financing statement, registering against the serial number of the yacht. Later, when Clive fails to pay the balance on the yacht when due, and also fails to pay his other creditors, Lovely Boats' water-tight registration allows them to proceed with repossession of the yacht.
Create Secured Party Group: a secured party group is needed to complete a registration
Secured Party Details — the correct organisation identifier for Lovely Boats is its Australian Company Number (ACN)
As Lovely Boats is an incorporated company, the ACN must be given, not the company name. The ACN is the number ASIC issues when a company is incorporated.
Address for service — use Lovely Boats' officially registered company address and email address
The address is where documents may be served and enquiries made.
Create a registration:
Collateral type - select consumer
To help ensure a valid registration make sure you select consumer property, instead of commercial, in the registration process.
Collateral class — select watercraft
‘Watercraft’ is the collateral class used for registration.
Serial number of yacht — hull identification number
The correct serial number of the yacht must be given. Clive is an individual grantor, but since the yacht is consumer property, Lovely Boats can only register against the serial number, not against Clive's name. A watercraft must be described by its unique hull identification number (issued by a state or territory registration authority, or put on the hull by the manufacturer) or any official number issued by the Registrar of Ships.
Registration period — 7 years
For consumer, or serial-numbered goods, the maximum registration period is 7 years.
Purchase money security interest (PMSI)? tick the box
This retention of title arrangement, with Lovely Boats giving a period of credit to pay the balance, is within the definition of a super-priority PMSI—it is still necessary to tick the box and claim the PMSI. Lovely Boats has complied with the rules for registering PMSIs, because it has also registered well before Clive takes possession of the yacht.
Proceeds? for this case study, this should appear as automatically ticked and the words all present and after acquired property then displays in the text box below
As the 'proceeds' box is automatically ticked this enables Lovely Boats to continue their security interest into any proceeds. The default type of proceeds, all present and after acquired property, means Lovely Boats is protected if Clive deals with the yacht, such as Clive on-selling the yacht before he has fully paid for it.