Priority rules decide which secured party ranks higher and determines who can be paid out first from the collateral.
The rules are generally, first in time, first in line (i.e an earlier dated registration beats a later one over the same collateral).
An important exception is a PMSI. If your registration falls into one of the following categories, you may have a PMSI and need to make sure you register correctly to protect yourself.
Does your registration:
- involve a lease for a term of:
- more than two years
- up to two years but includes options to renew so the total term might exceed two years
- up to two years or an indefinite period and the lessee has uninterrupted possession for more than two years. (Note: this definition applies to leases entered into from 20 May 2017. For leases entered into before this date, the earlier PPS leases definition still applies) see Leases and Bailments
- secure payment of credit that you gave for the purchase of the particular property that you sold (eg retention of title, or loan finance for a particular asset to be purchased)
- involve a commercial consignment.