Why understanding the PPSR is critical to your agribusiness operations

November 23, 2022

The Personal Property Securities Register (“PPSR”) is a vital legal arrangement to understand if you want to protect the major assets of your business.  This is particularly the case in the agribusiness space where significant sums of money are tied up in “movable” assets like livestock, trucks, tractors, harvesters and other farm machinery or where the assets are not clearly and easily identifiable as your asset on your land.

The PPSR is an electronic register that allows you to register a security interest over personal property, it acts as a public notice board of security interests in personal property.

For those dealing with assets that may not always be located on their property or which may be hired or loaned or simply borrowed it provides security around who really owns the asset.

What can you register a security interest over?

Any ‘personal property’ can have a security interest registered over it. This includes most things other than land, buildings and fixtures. Some examples include:

• crops and grain;
• livestock including products such as livestock semen and wool;
• vehicles & boats;
• equipment;
• artwork; and
• new or second-hand goods.

Why register?

Registering your security interest correctly over your personal property while it is not physically in your possession or if you are selling your goods on retention terms can protect you from the risk of losing your goods or being left out-of-pocket. No matter the terms and conditions of a contract, these terms may not be enough to protect your goods; registering on the PPSR gives you a more complete protection from loss.

By registering your interest in personal property, if the holder of your goods becomes insolvent or declares bankruptcy, you will benefit from being easily locatable on the register and the insolvency practitioner can identify you as a secured creditor to be given priority for repayment. If you don’t register your interest, your goods may be sold off for the benefit of all creditors and anyone who has registered a security interest will be first in line to receive their goods or money back before you.

You should register your interest on the PPSR as quickly as possible when you know your goods will be leaving your physical possession. The earlier you register the better standing you will have on the list of any secured creditors.

PPSR & agribusiness

If you are buying goods such as livestock, grain or machinery, you can use the PPSR to check that the goods being sold are not being used as security for an outstanding debt or obligation. You can search here. If you purchase goods subject to a security interest and the seller stops satisfying their obligations to that creditor, there is a good chance that the creditor will recall the goods from you without any compensation for your loss.

If you are selling goods and you use retention of title terms or have consigned your goods to another’s custody to be sold or stored, registering an interest over these goods will secure your interests should the buyer or holder become bankrupt or insolvent. If you fail to register your interest, the goods may be sold in order to meet the debts owed to the secured creditors of the person or business holding your goods.

What is the process/how we can help

Searching the PPSR is quick and easy and only costs $2 to complete online. Registrations themselves are more complex and for a PPSR registration to be effective accurate details of each party and the assets themselves must be provided.

Less experienced users often get some of these details incorrect. This is a problem because even small mistakes can render a whole registration invalid.

If you sell your goods on retention terms or consign your goods to others’ custody, it’s a good idea to get in touch today and talk to one of our lawyers about assisting you in registering your personal property security interest.

For assistance in undertaking searches of the PPS Register or in registering your personal property security, please contact a member of our Business Services team.