What is PPSR?
A PPSR gives protection when leasing or selling goods.
Anyone who has been in business, even for a short time, will have encountered the PPSR (Personal Property Securities Register). The PPSR is a searchable online register that records if a third party has a financial interest in the assets of individuals or entities.
The register only records interests in personal property (not land). Personal property includes all property that is not land or ships.
If you or your business leases or sells goods on credit terms, or if you have lent money to a third party, you should seriously consider registration on the PPSR in order to protect your business or yourself.
Registering a security on the PPSR
It is helpful to look at examples where registration on the PPSR would be appropriate.
• Leasing assets for a term of longer than 12 months, such as eftpos or photocopier equipment
• Selling goods on credit terms, for example, payment is due on the 20th of the following month
• Selling goods on consignment terms where payment is due when the goods are sold, or
• Making a loan to an individual or a company.
In each of the above situations, registration on the PPSR provides you with protection if rental payments or invoices are not paid or loan payments are not kept up. PPSR registration ensures you will be paid before parties that do not have registered securities.
If you register, you may be able to collect any goods or even trace the proceeds of the sale of those goods. When goods are supplied on credit terms, a ‘super priority’ exists if registration is completed within 10 working days of delivery of the goods. This super priority will have priority over all prior registrations no matter when registered.
What happens if I do not register?
If you don’t register on the PPSR, it may mean that you are not paid in full – or at all.
How to register?
To register on the PPSR you must have a contract with the party you have leased to, sold goods to or lent money. That contract needs to include a right to register on the PPSR.
Timeliness of registration on the PPSR is critical. Where there are two registrations in respect of the same property the first registration will have priority.
Searching the PPSR
You would search the PPSR if you are:
• Considering leasing, selling, or lending to a third party to determine what other obligations and registered securities they have
• Considering buying personal property from a third-party. The most common example of this is the purchase of a motor vehicle. Money may be owed on the vehicle, and without having the security discharged as a condition of purchase, you run the risk of losing the vehicle and the money you paid for it
• Buying a business that includes personal property as part of the assets
• Selling a business and you want to determine if any money needs to be repaid, or
• Buying land with buildings on it that includes chattels.
How long does PPSR registration last?
Registrations on the PPSR expire five years after registration. It is important to note when to renew registrations before they expire. If registrations are renewed, their priority continues from the date of the original registration.
If registrations are not renewed and you subsequently reregister, the priority will be from the date of the subsequent reregistration.
What if things go wrong?
If a person or entity you have leased to, sold goods to or loaned money to becomes bankrupt, goes into liquidation or placed into receivership – what should you do?
Talk with us as soon as possible so we can advise you on your options. If you have registered on the PPSR, your position is stronger than if you haven’t.
Regularly lease, sell goods or loan money to third parties?
We can help you to review your existing contracts or prepare contracts to help protect your business. We can advise you on how and when you should register on the PPSR.
Navigating the PPSR is fairly straightforward. If, however, you have any questions or queries regarding the PPSR and how it benefits or affects your business, please don’t hesitate to contact us.
DISCLAIMER: All the information published is true and accurate to the best of the authors knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this article. Views expressed are those of individual authors, and do not necessarily reflect the view of this firm. Articles appearing in this newsletter may be reproduced with prior approval from the editor and credit given to the source. Copyright, NZ LAW Limited, 2019. Editor: Adrienne Olsen. E-mail: adrienne@adroite.co.nz. Ph: 029 286 3650 or 04 496 5513