When buying goods—searching the register helps you make an informed decision because you can check whether the valuable goods you want to buy are free from existing financed debt and so safe from repossession.
For example, when buying:
- goods from a wholesaler other than for immediate cash (e.g. buying goods on retention of title arrangements or on consignment)
- vehicles (other than from a licensed motor vehicle dealer).
As a buyer, you will ‘take free’ of security interests that your seller has granted over the collateral, if the property is sold to you in the ordinary course of the seller’s business, if the property is the kind they ordinarily sell.
When selling on retention of title, or if you are hiring or leasing out goods - properly registering can protect your interest should any of your customers not pay when due or go broke, even if the goods or assets are on sold, mixed or installed into other goods by your customer.
If you don’t make a registration on those goods or assets and your customer goes broke before they have fully paid you, your goods may be sold to pay secured creditors first.
If you are not registered, you will probably be an unsecured creditor in an insolvency and may not recover much, if anything, of what you are owed.
If you are leasing, or selling on retention of title or on consignment, you may have a purchase money security interest (PMSI) enabling you to claim super-priority provided you register it prior to delivery to your customer and you claim it as a PMSI on the register.