The Personal Property Securities Act 2009 (Cth) (PPSA) commenced in January 2012 and deals with the process and steps required to take an effective security interest in personal property.
One of the steps for a fully effective security interest is that the security interest is ‘perfected’ – this is the step that sets the priority of security interests against one another. The most common way of perfecting a security interest is by registering the interest on the Personal Property Securities Register (the PPSR). Generally, the security interest that is first registered has priority over later registered interests (subject to the super-priority rules for purchase money security interests (or ‘PMSIs’)).
A two-year transitional period applies under the PPSA for transitional security interests. The PPSA treats any security interest that was created under a security agreement prior to 30 January 2012 (a transitional security interest), as having been ‘temporarily perfected’ for a period of two years. During the temporary perfection period, these transitional security interests have priority over any other security interest that was created and perfected after 30 January 2012.
The transitional period ended at midnight on 31 January 2014. This means that anyone with a transitional security interest that is not registered on the PPSR by 31 January 2014 can lose their priority ranking in the asset over which they have the security interest. They can also lose the asset altogether if the grantor of the security becomes insolvent and the security interest is not registered (even if they are the owner of the assets).
The registration of a transitional security interest on the PPSR is free.
If you have a transitional security interest and need help to register it, or if you have any questions about the PPSA, contact Andrew Andreyev on 1300 654 590 for assistance.