PPSR-have you checked? Do you have all the relevant documents? You need the security agreement and the documents evidencing the original transaction (tax invoice, hire purchase agreement, et cetera). Does the grantor actually have an interest in the collateral.
Do you have all the relevant details of the grantor? When registering a security interest against the company grantor, it is the ACN which must be inserted and not the ABN, otherwise the registration may be void. If the grantor is a corporate trustee and the trust has an ABN the registration should be in the name of the ABN of the trust otherwise the registration may be void.
An error in the serial number may render registration seriously misleading and therefore void. Motor vehicles, aircraft, boats, patents, and even plant breeder rights are all examples of collateral that must be registered against the serial numbers.
The PPSA does not apply to fixtures. When deciding whether you are dealing with a “fixture” have regard to whether the item has been affixed to the land or building, will cause damage if it’s going to be removed or whether the cost of removal will exceed the value.
Have all of the goods been described? For example, accessories to earthmoving equipment need to be separately described or encumbered. Simply checking goods as ‘is inventory’ when the goods are not inventory may also result in a potentially void registration. A PMSI only has super priority for inventory if it is registered prior to the grantor obtaining possession of the goods.
If it’s a Purchase Money Security Interest (PMSI) is it correctly registered? To have a PMSI, and get super priority, you need:
- a security interest that secures all or part of the purchase price of the collateral;
- a security interest taken in collateral by a person who gives value for the purpose of enabling the grantor to acquire rights in the collateral, to the extent that the value is applied to acquire those rights;
- the interest of the lessor or bailor of goods under a PPS lease;
- the interest of a consignor who delivers goods to a consignee under a commercial consignment.
If a security interest is not a PMSI but has been registered as one, the registration will be deemed void.
Timing is everything. If a security interest is registered more than 20 business days after the security agreement was created, than the registration may be set aside in the grantor becomes insolvent within six months of the date of registration.
Under the general rule, a buyer or lessee who acquires property in the ordinary course of the Seller’s business can acquire the property free of any security interest that may have been granted by the seller.
Need a quick pointer? Give Amanda Heard a call – 07 3152 4401