Business supplying serial-numbered property to a consumer on retention of title terms

A collection of boats lined up in a harbour

This case study does not cover every step of the registration process, but instead highlights some of the key questions you may have.

Lovely Boats, an Australian company, 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 (ROT) 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 as they have priority over the other creditors.

Create Secured Party Group

A secured party group is needed to complete a registration.

a) 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.

For more information see Create a secured party group.

Sample image of secured party details, Organisation, ARSN no, ACN yes selected and ACN number listed

b) Address for service - use Lovely Boats' officially registered company address and email address

The address for service is where documents may be served and enquiries made.

Sample image of secured party group details

Create a registration

c) Collateral type - select consumer

To help ensure a valid registration make sure you select consumer property, instead of commercial, in the registration process. 

Sample image of collateral type with commercial selected

d) Collateral class — select watercraft

Watercraft is the collateral class used for registration.

Sample image of collateral classes with Tangible property - Watercraft selected

e) 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 (A HIN is 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.

Sample image of watercraft identifier with HIN selected

f) Registration period — 7 years

For consumer, or serial-numbered goods, the maximum registration period is 7 years.

Sample image of duration of registration with 7 years selected

g) 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 a PMSI, because it has also registered well before Clive takes possession of the yacht. Find out more about Priorities and purchase money security interests.

h) 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. For more information see Proceeds to be claimed.

Sample image of additional details with proceeds to be claimed selected
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