The Personal Property Security Register (PPSR) is an online database recording any legal claims to personal property used as loan collateral in Australia. It was started in 2012, with a transitional period until 2014.
The Registrar of Personal Property Securities, part of the Australian Financial Security Authority (AFSA), oversees the PPSR. It is modelled on similar regimes that exist in countries like Canada and New Zealand. The PPSR supersedes national, state and territorial registers, and places all of the personal property information into a single database.
The Australian government charges a small fee to conduct a PPSR search and collects fees to register or amend any information related to it. Business owners who fail to register property claims can end up entangled with unsecured creditors in the event of a third party declaring bankruptcy.
Purchasers of goods can check the register to ensure whatever they are buying is not subject to a registered security interest – known as ‘encumbrance’ – while lenders or suppliers can register security interests to protect the goods they supply.
How PPSR is used
Personal property listed in the PPSR include boats, artwork, cars, inventory, livestock and crops, as well as intangible items such as intellectual property, investments and licences. Essentially, all property an individual may own except for real estate, can be registered on the PPSR.
Because the PPSR is a central repository of information about who may have an interest in an asset, it helps buyers avoid nasty surprises. For example, Noah is buying a second-hand motorbike in Canberra. He can check the PPSR to be sure that no one else, such as the lender, has a claim to that bike. If the lender did have a claim to the vehicle but the seller didn’t disclose that information, the lender could rightly repossess the bike once they stopped receiving loan payments.
Also banks can use the PPSR to note their interest in a borrower’s personal property. If the bank that loans money for Noah to buy that bike registers an interest in the vehicle, it theoretically has a better chance of recovering the asset if Noah goes bankrupt.
The property subject to a security interest is known as collateral and the person who holds the security interest is called a secured party. The person who grants the security interest is a grantor.
To be legally effective, a security interest must be legally enforceable, attached to a particular collateral and be perfected by registration on the PPSR when required by law.
PPSR data is also considered a useful economic indicator. In 2017, it was estimated that the PPSR supported around 24% of the country’s gross domestic product (GDP).
Importance of PPSR
Grasping the importance of the PPSR and registering property is a key part of doing business in Australia. The system is designed to protect banking institutions but also rural farmers, small business owners and contractors when it comes to their property claims.
The banks may be at an advantage as they don’t tend to forget to register their assets, while individuals and small businesses sometimes do. Perhaps because they are too busy or don’t understand the impact of registering their property on the database.
The PPSR is supposed to be simple and inexpensive for everyone to register property online. However, you can pay a professional to ensure you pass the strict legislation. This method is more expensive but ensures any mistakes, incorrect documentation, or incorrect or out-of-time registrations are avoided.
We can help
If you’re interested in finding out more about the Personal Property Security Register (PPSR), then get in touch with the financial experts at GoCardless. Find out how GoCardless can help you with ad hoc payments or recurring payments.