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If you lend money make sure you register your security interest

A new court decision has found that the Personal Property Security Register (PPSR) is the final word on what is a security interest in personal property.

Where you lend money to clients or customers, you need to be aware of the Personal Property Security Register and how it can protect your interests if used correctly. Here is a recent article published by the Law Society of NSW.

The case involved three Caterpillar construction vehicles leased out to a company. The company borrowed money and used the Caterpillars as security.  The credit provider registered its interest on the PSSR (, a government register where details of security interests in personal property can be registered and searched.

The company subsequently went into liquidation, with the lender claiming to be a secured creditor. The court found the lease on the Caterpillars was a security interest and that it could be used to secure the loan.

In determining priority of creditors, the court has to consider the 24 month transitional period for personal property on state and territory registers to make it on the PPSR. It then found that the owner of the Caterpillars should have registered their interest on a state register before the commencement of the PPSR and didn’t, and they hadn’t registered the Caterpillars on the PPSR either, so their interest was not enforceable.

However, the lender’s registered interest on the PPSR was enforceable against third parties, including Caterpillars’ owner.  After a result of this decision, those in the business of leasing personal property or selling goods on a retention of title basis, should register their interests on the PPSR to avoid losing their priority to the goods. You should be wary of relying on the 24 Month transitional provisions because if your interest was registrable prior to the start of the PPSR, but not registered, you will lose the benefit of those provisions.

Source: Law Society of NSW