The Personal Property Securities Register (PPSR) is a national electronic register whereby security interests can be registered over personal property. The register is primarily governed by the Personal Property Securities Act 2009 (Cth).
Under the Act, personal property is essentially defined as any property other than land and certain rights and entitlements. In a rural context, personal property can include crops, livestock, products of livestock (such as the wool on a sheep before it is shorn), farm machinery and share farm arrangements.
Collateral is the term used to define personal property which has a security interest attached to it. A security interest refers to any interest in personal property created by a transaction that in substance secures a payment or an obligation from the grantor of the personal property.
Similar to a registered mortgage over land, a registered security interest provides a secured party (for example a lender, financier or lessor) with security in the event that the grantor defaults in any way under their security agreement.
Upon default of a grantor, the secured party can enforce action against the grantor under Part 4.3 of the Act. The secured party is entitled to seize the collateral and has the choice of either selling the collateral or retaining the collateral.
Purchasing a Rural Property
If your rural purchase includes additional inclusions such as crops, livestock or farm machinery, it is vital that your solicitor conducts a search on the PPSR. This will determine whether these inclusions have any security interests attached to them from prior security agreements involving the vendor.
For example: Your contract for sale provides for the inclusion of a Tractor as part of your purchase. Because of this, your solicitor conducts a search on the PPSR against the vendor’s name. The search reveals that the Bank has a registered security interest over the Tractor from a prior finance agreement between the Bank and the vendor. Your solicitor promptly telephones the vendor’s solicitor to request that the interest over the Tractor be discharged prior to settlement. By doing so, your solicitor is ensuring that you have clean title to the Tractor.
This article is general information only and should not be relied on without obtaining further specific information.