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What is the Personal Properties Securities Register (PPSR)?
The Personal Properties Securities Register (PPSR) is a national register administered by the Ministry of Economic Development where information about security interests are recorded and searched.
A security interest is an interest created by a transaction that, in substance, secures payment or performance of an obligation.
It is possible to search for information about security interests held over personal property and motor vehicles by individuals and companies.
The PPSR was created as a result of the Personal Property Securities Act 1999 which came into force on 1 May 2002 and it replaced a number of existing registers including the Chattels Register, Motor Vehicle Securities Register, and the Register of Company Charges.
Why use the PPSR? When should you register a security?
Registering your security interest may give you a better chance of recovering a debt if your debtor defaults.
The Personal Property Securities Act contains rules for determining priority between security interests in the same collateral (the personal property that is subject to the security interest).
If your security interest is not registered and a debtor is adjudicated bankrupt or placed into liquidation those creditors who have secured their interest will be ahead of you when payments are made or assets distributed.
It is therefore important to register your security interest as soon as possible.
The PPSR can also be used to assess the level of risk a debtor may represent to a creditor.
Before entering into a contractual relationship with a debtor it is prudent to search the PPSR to check whether they may pose a credit risk.
You may:
- Search a debtor to determine whether there are any existing security interests over their collateral (the personal property that is subject to the security interest) which may mean they have a number of existing debts.
- Search a debtor to identify if the piece of collateral they are offering you as security has been used as security for another party and if this is so, it means that another party will have priority over the offered collateral.
- Search collateral on the PPSR before buying an item. You can check to see if the item is encumbered with an existing registered security or you can conduct a debtor search (against the seller of the goods). If you are purchasing a car, you may search on the registration number or VIN.
Does the PPSR affect you?
Are you in business?
It is important for businesses providing credit to look at ways of protecting themselves financially by registering their security interests on the PPSR.
Many people only learn or become aware of the PPSR after their debtor defaults or becomes insolvent and they lose out financially.
While a financing statement does not always guarantee you will get what is owed in liquidation, it increases your chances and puts you in a better position than an unsecured creditor (a creditor who has not registered their security interest on the PPSR).
The PPSR can help assess the level of risk before engaging in new business with individuals or organisations.
Do you know if you are on the PPSR? Should you be on it?
If a charge is registered against you or your business you may be unaware of this.
This may cause problems when selling or winding up a company as often these charges need to be removed beforehand.
Has the security been registered correctly? Has it been perfected?
A perfected security is where the security interest has attached and the secured party has either registered a financing statement on the PPSR or has possession of the collateral.
A correctly perfected security can rank higher than an unperfected security when trying to recover debts.
A financing statement contains information about your security interest and is registered in the form of a notice on the PPSR.
A financing statement contains the following information:
- debtor details
- collateral details
- secured party group details
- the expiry date
- whether it relates to a prior security interest
The maximum term of registration is 5 years and can be renewed at any time before the expiry of that term.
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