How can I protect my business?
The Personal Property Securities Register, or PPSR for short, can help. The PPSR is a single, national online database that shows you whether someone is claiming a security interest in goods or assets.
You can also make a registration so others know when you have retained an interest in goods you are supplying, or leased/rented out goods for more than two years. This means that if your customer doesn’t pay, or goes out of business, you are in the best position to get your goods, or their value, back.
A written agreement may not be enough to protect you on its own. If you don’t register on the PPSR and the business you’re dealing with goes out of business before they pay you, you could end up out of pocket.
You can also search the PPSR before buying valuable second hand goods, for example vehicles and machinery. If you buy goods that have money owing against them, they could be repossessed, even after you’ve paid for them. A PPSR search will help you identify if money is owing against a vehicle or other machinery before you buy it.
A PPSR search costs as little as $2, and a 7-year registration is $6.
What is ‘personal property’?
Personal property is a legal term that means any property that is not land, buildings or fixtures. Personal property covers a lot – some common examples include:
- Cars and utes
- Trucks, tractors and trailers
- Scaffolding and temporary fencing
- Building materials (before they’re actually fixed to the build)
- Your ‘stock’ if you’re a manufacturer, for example clothing, wine and furniture
- Jewellery and artworks
You can find a full definition of personal property in our PPSR Glossary.
Guidance to help you during COVID-19
COVID-19 has impacted thousands of businesses across Australia. Some have been forced to close for an extended period, while others have remained open, but with significantly reduced revenue.
Even if your business has managed to navigate these difficult economic circumstances, you could still be at risk if your customers go out of business.
We have developed new resources to help you during COVID-19.
PPSR key terminology
The Act and PPSR apply to security over personal property – property that is not land or fixtures to land (i.e. real estate and buildings).
Personal property can be owned by a commercial organisation or an individual.
A business can use personal property as collateral (as security for a debt owed to sellers or financiers), and this can include goods leased or hired, or received on consignment.
In such cases, the, seller, owner, lessor, lender, consignor or financier – called the secured party in this guide – has a security interest in the collateral.
A security interest must be registered on the PPSR by the secured party to ensure their interest is secured.
The debtor, buyer or customer who offers the collateral as security is called the grantor under the Act.
For more information on key concepts see Registering on the PPSR.
When buying goods
Searching the register lets you know if the valuable goods you are interested in buying are being used as security for a debt or other obligation. The register won’t tell you the value of the obligation, but it lets you know who the obligation is owed to so you can find out more.
For example, someone may try to sell you used goods, such as a van or piece of machinery, without telling you they still have finance owing on it.
And if they stop making payments on the loan there’s a very real chance the finance company can turn up on your doorstep and take those goods away, without paying you a cent for your loss.
For $2 you can check that goods you want to buy are likely to be free of financed debt, and safe from repossession.
When selling goods on retention of title or consignment
Making a registration shows searchers that you are claiming an interest in the goods or assets you are selling on retention of title terms, or have consigned to someone else to sell on your behalf. This interest means the goods or assets secure the debt or obligation that someone owes you. The registration protects your interest in the goods or assets should the customer default or go broke.
If you don’t make a registration on those goods or assets and your customer goes broke before they have fully paid you, your stuff may be sold to pay secured creditors first. If you are not registered, you will be an unsecured creditor in an insolvency and may not recover much, if anything, of what you are owed.
If you register as early as possible, you stand the best chance of being first in line over other creditors. It also helps you to protect your interest even if the goods or assets are sold on, mixed or installed onto other goods.
When leasing, renting or hiring out goods
If the lease or hiring arrangement was entered into on or after 20 May 2017 and is for at least two years, or an indefinite period that will last for more than two years, then this applies to you.
If the lease or hiring arrangement was entered into before 20 May 2017, see Leases and Bailments for more information about how this applies to you.
Think you’re already covered with a contract?
A retention of title clause (indicating that title remains with you until goods are paid for in full) in your contract or invoice, no longer protects you on its own.
If you don’t make a registration, your retention of title clause is unlikely to stack up against others when you need to rely on it.
In other words, someone else who has registered an interest is ahead of you in the queue should your customer default or go broke.
Make sure you back up your contracts by registering your interest.
The PPSR as a risk management tool
The PPSR is the single, national online database of security interests in personal property in Australia.
The PPSR may be relevant to your business clients that are:
- selling, hiring, renting or leasing on terms
- buying or selling valuable second-hand goods
- wanting to raise finance using stock or other personal property as collateral.
Common ways the PPSR can protect business from risk
Protects business when buying second-hand goods:
- A search of the register when buying second-hand goods will indicate if there is an existing security interest on the item.
- If there is a prior security interest on the goods, they could be repossessed.
Protects businesses that sell on terms, such as retention of title or consignment, or hiring, renting or leasing out valuable goods, machinery, vehicles and equipment:
- Businesses can register their interest in goods they have yet to receive payment for, helping them to recover the debt and lessen the risk of losing the goods if the customer does not pay or becomes insolvent.
- The PPSR legally defines the priority of security interests, with a ‘first in, best dressed’ principle.
Helping clients understand the PPSR
Read information pages on key topics or complex topics such as key concepts, enforcement of security interests, collateral classes and Purchase Money Security Interests. See Registering on the PPSR for more information.