- Personal property includes retention of title rights.
- A personal property security is when a secured party takes an interest in personal property as security for any obligation (such as a payment obligation) that involves the supply of secured finance
What effect does the Personal Property Securities Act 2009 have on retention of title clauses?
The Personal Property Securities Act 2009 (Commonwealth) (“the PPSA”) (which is due to commence before February 2012 – see blog dated 5 September 2011) will have an adverse effect on all commercial suppliers who rely on retention of title clauses in their trading terms.
As previously noted, the PPSA sets up a new scheme of registration of security interests in personal property.
The provisions of the Act make it clear that:
All suppliers of goods on credit should now:
· Review their terms of trade with a view to ensuring that they meet the requirements of the PPSA, and
· Be in a position to register a financing statement (covering their retention of title interest) on the Personal Property Securities Register, when it commences operation. Registration of a financing statement enables a secured party to ‘perfect’ its security interest.
Commercial lawyers in practice in Victoria should already be reviewing their clients’ terms of trade to ensure compliance with the PPSA.
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