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The new Personal Property Securities Act – What it means for Landlords

The new Personal Property Securities Act – What it means for Landlords

Published on September 12, 2011 by Matthew RaffertyMatthew Rafferty

In brief – Landlords are not directly affected. This Act primarily affects finance providers and people who lease goods. A landlord will be affected if they provide finance or lease goods (eg vehicles or equipment) or possibly if they finance a lessee’s fitout of premises and wish to retains ownership of the fitout.

The main objective of the Act is to remove the illusion of wealth. The main benefit of this to a landlord is they will be able to more easily see the true value of a potential lessee.

The new Act is due to commence until 31 October 2011. There is a 24 month transitional period, during which existing security interests must be registered. Common examples of security interests under the Act are fixed and floating charges, chattel mortgages, retention of title rights, hire purchase arrangements, pledges and consignments.

This is a long and complex Act which is yet to be tested by Australian businesses and in Australia courts. There are lots of changes to the laws of personal property securities (eg – fixed and floating charges will be known as general security arrangements).  If you think it applies to you, you should seek specific advice in relation to your situation.

Why should landlords be interested?

There are some benefits for Landlords.

This new Act allows financiers (and others) to register any security interests they have in personal property. If they don’t register their security interest, they risk their interest being forfeited to other financiers who did register their security interest – so financiers will register security interests they hold in goods.

The new register – the National Personal Property Security Register – will show how much of a particular asset is encumbered by a secured debt. It will also show the extent that a person or company (or prospective lessee) is encumbered by secured debts over their assets. Remember, this new register will not record interests in land – you will still need to search the state land titles office for interests in land.

This new register will replace many existing state and national asset registers, including REVS, the Security Interest of Goods Register, and the ASIC Register of Company Charges.

Where is this register and how is it used.

After it commences, the Register will be maintained by the Insolvency and Trustee Service Australia ( In the meantime, more information can be found on the PPSR web page (

Subject to privacy laws and provisions in the new Act a landlord will be able to search either for details of debts of grantors (people or companies which have granted security interests) or security interests in particular goods (eg using a vehicle’s VIN). By doing so, a landlord will have more information available to help decide, for example, whether to insist on a personal guarantee or bank guarantee from a tenant. There will be a fee charged for each search.

The New Act at a glance

  • The act applies to security interests in personal property (including intellectual property).
  • Security interests include charges, mortgages, retention of title (ie – title remains with the vendor until all money paid), or the interest of an owner of leased personal property – under the new Act, an owner can lose ownership of an item of personal property if it fails to register its ownership interest prior to leasing the item.
  • It creates a new Commonwealth register: the National Personal Property Security Register.
  • It allows (and requires) a person who holds a security interest in another person’s personal property to register that interest.
  • The priority of security interests in an item of personal property will be determined by the order in which they were registered.
  • Items of personal property can be bought and sold (or leased, charged or mortgaged) free from any unregistered security interests.


Ms Smith owns a forklift. It was purchased with finance provided by Money Pty Ltd.
The loan was secured – Money Pty Ltd retain a security interest in the forklift. Money Pty Ltd registered their security interest on the new register.
Later, Ms Smith seeks to raise more money to finance an expansion of her business. She approaches her bank for the additional funds – the intention is for the bank to create a general security arrangement over all Ms Smith’s assets. They perform a search of the register and find that Ms Smith’s ownership of the forklift is encumbered by the security interest of Money Pty Ltd. They now know exactly what the value is to them of Ms Smith’s assets.
Money Pty Ltd’s security interest, being registered first, will have priority over the bank’s general security arrangement. The bank grants the finance and registers its general security arrangement on the new PPSR.
If Ms Smith were to encounter financial difficulties, Money Pty Ltd will have a priority over the bank in relation to any proceeds of sale of the forklift. However, if Money had not registered its security interest, even though it was created first, the bank’s security interest would have priority over Money Pty Ltd – that is, the bank would get the proceeds of a sale of the forklift, not Money Pty Ltd.
Later (but prior to any financial difficulties) Ms Smith seeks to lease additional space to run her business. Ms Smith appears to have substantial assets; however the landlord checks the new register and finds that all Ms Smith’s assets are encumbered by the bank’s general security arrangement. The landlord ensures that it obtains an adequate bank guarantee from Ms Smith.

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