If you sell goods on retention of title terms, or lease goods out to contractors and others for periods of more than two years, or for a period which in fact has lasted more than two years, then registration can protect you if you claim a purchase money security interest (PMSI) on the register.
PMSI status can give you priority even over other earlier registered interests in that property, such as that of the customer’s bank.
Motor vehicles should be registered against their serial number, not just against the name of the grantor (lessee or purchaser of the goods from you).
This will protect you in case the goods are sold on by your customer. The serial number will usually be the Vehicle Identification Number.
Some portable mining and construction equipment might not meet the definition of motor vehicle under the PPS Regulations.
If it has a serial number, is built to be propelled on land by a built in motor that is over 200W power and it is capable of going over 10 kph, it will meet the definition.
When buying goods—searching the register helps you make an informed decision.
You can check whether the valuable goods you want to buy, such as yellow goods, motor vehicles and machinery, are being used as security for a debt or other obligation.
Whilst you might be protected even without a search, because the goods are sold in the ordinary course of business, (or in the case of motor vehicles, are bought from a licensed dealer), a search gives you extra peace of mind that you are getting the property free of any security interests over it.
Important note: When searching you can search against the serial number of motor vehicles and/or the relevant grantor identifier, an ACN (Australian Company Number) for example.
A correct registration can keep you first in line even when your customer has sold the goods you have a security interest in.
Your security interest can continue to the proceeds of the sale.
If the goods are equipment that was not supposed to be sold without your permission, you may have a claim to goods as well as the proceeds (up to the value of your debt claim against them), though the claim to the actual goods could sometimes be defeated by the interest of end-purchasers from your customer.
When goods are mixed together so they have lost their own identity (eg. Ingredients to make concrete), a registration can help protect your interest.
You may still be able to claim a proportionate interest in the manufactured or processed end-product, or claim a like proportion of its value.
If you have a security interest in goods that are added to other goods, such as tyres installed on trucks, your security interest in the tyres continues. Registration prior to installation helps protect your claim against later dealings with the trucks, other than for certain buyers or lessees of the trucks (see above on buyers).
Depending on the terms of the contract, there may be goods left on site which have interests which should be protected through registration.
- protecting the contractor‘s (or other ownership interest in) temporary works (e.g. scaffolding) to be removed at the end of contract
- the principal’s interest in goods paid for fully or partially by the principal but which are in the possession of the contractor; ‘step in’ or ‘take out’ rights for the principal to use goods on site to finish the contract in case of contractor default.
Construction contracts commonly provide that monies owing by either party may be retained by the other party pending stage completion or events.
The retaining party should consider registration of their interest in the monies as an ‘account’.