The Personal Properties Securities Register (PPSR) will be seven years old on 30 January 2019; accordingly, security interests with seven year registration periods will, unless renewed, expire from 30 January 2019.
The seven year security interest is the most common registration period and is the maximum period of registration for goods with a serial number (such as motor vehicles). According to the Australian Financial Security Authority, an estimated 115,239 registrations will expire in January 2019.
Businesses that registered seven year security interests on the PPSR shortly after it came into existence will need to review their security registrations to determine if those interests need to be renewed.
Why does this matter?
Expired registrations cannot be renewed. If a registration expires, a new security interest must be registered on the PPSR and it may rank behind other prior registered security interests.
If an existing registration is renewed, it will retain its original registration date and priority.
Priority of registration on the PPSR is important because it generally determines the order in which creditors are paid or can recover goods if the grantor of the security interest (i.e. the person who hires or buys goods, or borrows money) defaults.
There is also the risk that, if the grantor becomes bankrupt or insolvent and a security interest is not registered for a period, the security holder will lose their security interest altogether. This will be the case even if the security holder is the owner of the goods over which it holds a security interest.
What should you do to protect your security interests?
- Review and keep track of the expiry dates of your PPSR registrations. Businesses can obtain a free ‘registration due to expire’ report through their online PPSR account.
- Renew PPSR registrations before they expire. Any registrations that are no longer needed can be allowed to lapse or discharged for free.