What is a security interest?
The PPSR explains that a security interest is commonly created when a secured party such as a lender takes an interest in personal property of a borrower as security for an obligation.
Why registration can matter
The PPSR notes that registering a security interest can improve a secured party’s priority position and its position if a debtor becomes insolvent. Priority rules can be complex and depend on the facts and timing.
What counts as personal property?
Personal property can include vehicles, company assets, goods and intellectual property. The PPSR does not cover land or fixtures.
Existing registrations
Before granting new security, a business and its advisers may review existing PPSR registrations and finance documents to understand existing claims over assets.
PMSIs are specialised
A purchase money security interest has specific requirements and timing rules. The PPSR warns that incorrectly claiming PMSI status can make a registration ineffective, so professional advice is important.
Sources and further reading
- https://www.ppsr.gov.au/about-us/about-ppsr
- https://www.ppsr.gov.au/education-hub/protecting-your-business-assets/financial-services
- https://www.ppsr.gov.au/registering/you-create-registration/do-you-have-purchase-money-security
General information only. This material does not constitute legal, tax, credit or financial advice. SME Capital Partners is in pre-launch and is not currently offering or approving credit through this website.