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Do you have a purchase money security interest (PMSI)?

This page tells you how to work out if your security interest that you are registering on the PPSR is a PMSI (personal money security interest). These are special types of security interests that give you a super priority. 

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A PMSI generally gives your security interest priority over other people’s security interests in the same property, even if they registered their interest on the PPSR before you did.

Usually the person who registers a security interest first on the PPSR will be first in line to get their money or goods back if, for example, a customer doesn’t pay what they owe.

However if your security interest is a PMSI, it's likely you will automatically go to the front of the queue even if you registered your interest on the PPSR last.

When you register an interest in personal property, you’ll need to say if your interest is a PMSI. It’s important to get this right because:

  • If you don't check the box saying your registration is a PMSI and you later find out you’ve made a mistake, you won’t be able to change it. Your registration will still be effective, but you won’t be able to claim the special PMSI priority.
  • If you check the box saying your registration is a PMSI when it’s not, your whole registration will be ineffective.

There’s a time limit on registering PMSIs. If you don’t register within the time frame, you won’t be able to claim PMSI priority.

When is a security interest a PMSI?

If you have a security interest, it will generally be a PMSI when the money you've lent or credit you've given is for the purpose of funding all or part of the purchase price of the personal property.

Common examples of arrangements that give the security interest holder a PMSI include:

  • Secured property loans - where you enter into an agreement to lend money to finance the purchase of specific goods (such as a car) that secure repayment of the loan.
  • Supplying goods on credit (also known as a retention of title agreement) - where you supply goods on credit terms with payment at a later date secured by the goods.
  • PPS Leases and commercial consignments

PMSI examples

Example 1: Secured car loan

Ace Trucking needs to buy a new truck. Ace Trucking applies to Speedy Loans Ltd for the money to buy it. Ace Trucking agrees to allow Speedy Loans to take the truck as security for the loan in order to guarantee repayment.

Speedy Loans searches the PPSR and sees that Blue Bank Ltd has already registered an interest in all of Ace Trucking’s current and future property.

Speedy Loans agrees to lend money to Ace Trucking. Because it’s lending Ace the funds to buy the truck, it can register its interest in the truck as a PMSI. That will give Speedy’s security interest priority over Blue Bank’s interest, even though Blue Bank’s interest was registered before Speedy’s interest.

Example 2: Supply of goods on credit / retention of title arrangement

Style Landscapes needs to buy bricks to build a large fence for a customer. Style goes to Brickers and Pavers Pty Ltd to buy the bricks. Style’s customer won’t be paying for the fence for 30 days, so Style asks Brickers and Pavers to give them the bricks on credit, with payment in 60 days.

Brickers and Pavers searches the PPSR and sees that Red Bank has already registered an interest in all Style’s current and future property.

Brickers and Pavers agrees to supply the bricks on credit. Because it’s selling the bricks to Style on credit, it can register its interest in the loose bricks as a PMSI. That will give their interest priority over Red Bank’s interest, even though Red Bank’s interest was registered first.

Registering your security interest and claiming a PMSI

You claim PMSI priority when you register your security interest on the PPSR. In step 2 of the registration process, check the box ‘A Purchase Money Security Interest (PMSI) is claimed’.

See How to register a security interest for more information.

Register in time

To get PMSI priority, make sure you register within the correct time frame. If you don’t, you won’t get the PMSI super priority.

The time frame for registering depends on whether the property forms part of the inventory of the person giving the security interest.

  • If it is part of their inventory: before they take possession of (or the security interest attached to) the property.
  • if it isn’t part of their inventory: within 15 days them taking possession of (or the security interest attached to) the property.
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