What are personal property security interests?

As the Personal Property Securities Register will record “security interests” it is essential to understand what is and is not covered by that term.

Not all security interests are enforceable: they must be an “interest in relation to personal property provided for by a transaction that, in substance, secures payment or performance of an obligation” and must satisfy section 20.

The starting point is section 12 of the PPS Act.

Section 8 also lists interests to which the Act does not apply, including land and fixtures, water rights and bills of lading.

The security interest must be an interest in personal property.

Personal property is any form of property other than land and certain licences. It includes motor vehicles, contractual rights, business inventory, intellectual property and company shares. There are other rights or interests that fall outside the concepts of real and personal property. For example, the Act does not apply to native title rights and interests.

Personal property is known as collateral if it is (or is anticipated to be) the subject of a security interest.

When a security interest is registered, the collateral must be described in accordance with the rules given in Section 153. The type of personal property a security interest relates to is important because the type of personal property will, to some extent, govern priority disputes between secured creditors. It is also relevant to privacy of the Register.

Collateral is either commercial or consumer property.

The main collateral classes which are currently proposed to be included in the Regulations are:
• agriculture;
• aircraft;
• all present and after-acquired property;
• all present and after-acquired property, except;
• financial property;
• intangible property;
• motor vehicles;
• other goods;
• watercraft.

Future posts will consider the requirements for an enforceable security agreement, specific types of security interests and how security interests are registered.

It is useful to look at the list of current Commonwealth and State Acts that will be affected by the new Register:

Corporations Act 2001 Chapter 2K
Designs Act 2003
Patents Act 1990
Plant Breeders Rights Act 1994
Shipping Registration Act 1981
Trade Marks Act 1995
National Credit Code

Australian Capital Territory
Cooperatives Act 2002 s 270 and Schedule 3
Instruments Act 1933
Mercantile Law Act 1962
Sale of Goods Act 1954 s 29(2)
Sale of Motor Vehicles Act 1977

New South Wales
Co-operatives Act 1992 s 278 and Schedule 3
Factors (Mercantile Agents) Act 1923
Registration of Interests in Goods Act 1986
Sale of Goods Act 1923 s 28(2)
Security Interests in Goods Act 2005
Warehouseman’s Liens Act 1935

Northern Territory
Co-operatives Act s 264 and Schedule 3
Instruments Act
Registrations of Interests in Motor Vehicles and Other Goods Act
Sale of Goods Act s 28(2)
Warehousemen’s Liens Act
Workmen’s Liens Act

Bills of Sale and Other Instruments Act 1955
Cooperatives Act 1997 s 262 and Schedule 3
Credit (Rural Finance) Act 1996
Factors Act 1892
Financial Intermediaries Act 1996 s 97C
Goods Act 1896 s 27(2)
Hire-Purchase Act 1959
Liens on Crops of Sugar Cane Act 1931
Motor Vehicles and Boats Securities Act 1986

South Australia
Bills of Sale Act 1886
Co-operatives Act 1997 s 264
Goods Securities Act 1986
Liens on Fruit Act 1923
Mercantile Law Act 1936
Sale of Goods Act 1895 s 19
Second-hand Dealers and Pawnbrokers Act 1996
Stock Mortgages and Wool Liens Act 1924
Warehouse Liens Act 1990
Worker’s Liens Act 1893

Bills of Sale Act 1900
Co-operatives Act 1997 s 271 and Schedule 4
Factors Act 1891
Motor Vehicles Securities Act 1984
Sale of Goods Act 1896 s 30(2)
Stock, Wool and Crops Mortgages Act 1930

Chattel Securities Act 1987
Disposal of Uncollected Goods Act 1961
Goods Act 1958 s 31
Hire Purchase Act 1959
Instruments Act 1958 Parts VII and VIII
Motor Car Traders Act 1986
Property Law Act 1958 s 134
Second-Hand Dealers and Pawnbrokers Act 1989
Warehousemen’s Liens Act 1958

Western Australia
Bills of Sale Act 1899
Chattel Securities Act 1987
Factors Act 1842 (UK)
Factors Act Amendment Act 1878
Hire-Purchase Act 1959
Sale of Goods Act 1895 s 19

If you currently have interests regulated by these laws you need to plan for the Personal Property Securities Act.

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