What is PPSR and how does it work?
To understand what is the Personal Property Securities Register (PPSR) and how it works, you first have to understand its origins.
The Australian Government passed the Personal Property Securities Act 2009 (PPSA). The aim was to streamline the use of personal property as a security interest. But most importantly, it would:
- provide protection for third parties
- set priorities for competing interests in transactions, and
- give clear rules for creating, ending, and enforcing security interests in personal property.
Out of this law came the Personal Property Securities Register (PPSR). It was (and is) an amalgamation of the many registers that were in effect. The amalgamation created one ‘super’ registry for recording all transactions with personal property as interest. The PPSR is managed by the Australian Financial Security Authority (AFSA).
An extract from the PPSA law below summarises what is considered a “security interest” and “personal property”:
“A security interest is an interest in personal property provided for by a transaction that secures payment or the performance of an obligation. The form of the transaction and the identity of the person who has title to the property do not affect whether an interest is a security interest.
Personal property includes many different kinds of tangible and intangible property, other than real property. Examples include motor vehicles, household goods, business inventory, intellectual property and company shares. Personal property is known as collateral if it is (or is anticipated to be) the subject of a security interest.” (Excerpt, Personal Property Securities Act, Federal Register of Legislation)
With this new database, consumers and creditors has easy access to check the credit status for potential transactions. Quick Revs, for example, is able to help both buyers and creditors to get PPSR Checks on items such as a vehicle.
What is the PPSR?
The PPSR is an electronic register. It allows online searching, registration, and maintenance of financing statements. It is accessible 24/7/365 to allow users to conduct their research or update their listings in the register.
The PPSR is beneficial to both secured parties - creditors and consumers. And a PPSR check or PPSR search is necessary for successful transactions.
You should note that the register acts like a noticeboard. It doesn’t actually register or keep the documents. The PPSR isn’t a register of titles either. What it does is flag any property that someone has indicated they have a claim in.
The register allows a secured party that is claiming a security interest against the personal property of a grantor to list the details. Because of this, you can, therefore, place a notice to enforce your rights over the personal property.
How Does the PPSR Work?
The PPSR facilitates registration of security interests and to search the register for these listed security interests. Here is how PPSR Register works.
Section 66 of the PPSA 2009 provides the rules for analysing and agreeing on the priority for security interests used in the same collateral. Based on the Act, secured creditors are those who have registered their interest on the PSR. They are, therefore, are given first preference for repayment and distribution of assets in the event the debtor is bankrupt or enters liquidation.
Based on this, it shows why the PPSR is important for businesses and individuals alike. The ideal way for creditors to have a much better chance of retrieving a debt if the debtor defaults, is by registering a security interest on the PPS register. Registration of your security interests on the Personal Property Securities Register helps to manage your credit risk. For more information on this, the AFSA provides details on how to register your security interest on the PPSR.
Searching – The Australian PPSR Check
Where Quick Revs comes in is for searching the PPSR and getting a comprehensive, easy to read report. This report details all the critical information on the item you’re interested in, especially if you are buying a car.
Searching on the PPSR provides a report that you can use to assess the degree of risk that a debtor could potentially pose to a creditor. Because of its speedy reporting features, a creditor may carry out a PPSR search to check if a debtor may constitute a threat before entering into a contractual relationship with the debtor.
Below is a summary of the ways a potential creditor or consumer may use the PPSR:
- Run a check on the debtor to ascertain whether there is any existing security interest in their collateral. The creditor will know through the PPSR report if the debtor still has a number of existing debts.
- Run a PPSR check to determine whether the piece of collateral offered by the debtor has been registered as security for another party. This helps to determine whether another party has priority over the property to be used as collateral.
- Check collateral on the PPSR database before buying an item. You may also run a PPSR search to see if a pre-existing registered security restricts the item. If the item involved is a car, you may search on the Vehicle Identification Number (VIN). Alternatively, perform a debtor search against the seller of the items.
- Consumers should search the PPSR database before buying an item of personal property. This is necessary to establish that there is no money owing on such property. This is especially vital if buying a second-hand car from a private seller. You can search the PPSR database using the Vehicle Identification Number (VIN) to check whether there may be registered security interests on the vehicle.
If you need to conduct a PPSR search in Australia, then using Quick Revs will get you a detailed PPSR Certificate at one of the most affordable PPSR fees in the country.