PPSR and Conveyancing Settlements
25 January 2012
The Personal Property Securities Register (the Register) and the Personal Property Securities Act 2009 (Cth) (PPSA) will come into operation on 30 January 2012. The PPSA will apply to the release of security interests over personal property on and from that day. Land is not personal property under the PPSA and the PPSA does not apply to interests in fixtures.
The Register acts as a notice of existing security interests and does not create the security interest by registration (registration does however give benefits in deciding priorities etc).
Under the PPSA the secured party is responsible for amending the Register when there is a change to a security interest, but there are mechanisms for other parties to correct the register. There is currently no mandated form of release or form to effect a change to the Register.
Buyer takes personal property free of security interest in some cases
Under the PPSA there are extinguishment rules which mean that in certain circumstances a purchaser will take possession of personal property free of a security interest. These are set out in Part 2.5 of the PPSA and include:
- Where a security interest is unperfected (ie not registered, etc);
- Where a serial number in a registration, relating to a motor vehicle or other personal property that must be described by serial number, is incorrect or missing;
- Where personal property was sold in the ordinary course of the seller's business;
- Where new value is paid for secured property which is personal, domestic or household property with a market value of less than $5,000; or
- other cases.
In these cases the security interest in relation to the personal property may extinguish even in the absence of an express form of release. There are some qualifications in the extinguishment rules that may need to be considered. For example a person who enters into a sale or lease in respect of personal property with actual knowledge that the transaction is in breach of a security agreement creating a security interest is not able to rely on some of the extinguishment rules.
Evidencing release of security interest
In conveyancing matters, such as in the sale of a furniture package with real property, purchasers may require evidence of the release of a security interest at settlement. Extinguishment rules may also apply in some situations.
While there is no prescribed form for such a release of a security interest, the Australian Bankers’ Association and the Australian Finance Conference have developed a model Release and Undertaking to Amend Registration. While this document represents good practice, there is no compulsion for a release document to be in this or any other form.
More information about the personal property securities reform is available on the Personal Property Securities Register page.
 PPSA section 10, definitions of ‘personal property’ and ‘land’
 PPSA section 8(1)(j)
 See Question: Is it compulsory to register on the PPS Register? At http://www.ppsr.gov.au/Information_resource/Documents/PPSFAQ-General-ThemeRegistrationsv.2.pdf
 See PPSA Part 5.6 Amendment Demands
 PPSA section 43
 PPSA sections 44 and 45
 PPSA sections 46
 PPSA section 47
 See PPSA sections 48 – 52 dealing with currency, investment instruments, etc