The Personal Property Securities Act 2009 (Cth) (PPSA) came into effect at 12.01 am on 30 January 2012. It was one of the most significant commercial law reforms in recent times as it affects all security interests in ‘personal property’ where either:
- (i) the personal property over which the security interest is being granted or
- (ii) the grantor of the security interest is located in Australia.
One of the many changes brought about by the PPSA was the introduction of serial numbered goods. It is vital that goods are described by the correct serial number. If they are not described, or incorrectly described, the registration of the security interest may be deemed defective.
What are serial numbered goods?
Serial numbers goods are goods which, when being registered on the Personal Property Securities Register (the PPSR), may or must be described by their serial number.
The Personal Property Securities Regulations state that the consumer property and commercial property goods MUST be described by serial number. Specifically:
- Consumer property that is comprised of:
- motor vehicles;
- watercraft;
- certain intangible property (patents, trade marks, plant breeder’s rights and designs); and
- aircraft (including airframes, aircraft engines, helicopters and small aircraft); and
- Commercial property that is comprised of aircraft (including airframes, aircraft engines, helicopters and small aircraft).
In addition the following commercial property MAY be described by serial number:
- Motor vehicles;
- Watercraft; and
- Certain intangible property (patents, trade marks, plant breeder’s rights and designs).
For personal property, buyers should conduct a PPSR search on the day, or the day before, purchase, to ensure it is free from encumbrance. Not all commercial security interests are registered by serial number. A search by grantor may also be required to reveal all security interests.
What if you fail to describe your serial numbered goods by serial number?
If you fail to describe your serial numbered goods by serial number when registering your security interest in them (or indeed if you describe it using an incorrect serial number), then buyers and lessees will generally take the serial numbered goods free from your security interest. However, this protection does not apply if the buyer or lessee owns the property as inventory or was a party to the transaction that created the security interest over the serial numbered goods.
Conclusion
Not only did the PPSA extend the concept of security interest, but it also brought about the new concept of serial numbered goods. If you have a security interest in serial numbered goods, you must ensure you can identify it and register it correctly so that your security interest is properly perfected. If you are unsure or require advice about whether or not you have granted or been provided with a security interest over serial numbers goods (and how to register that security interest to maximise your security), please do not hesitate to contact LegalVision. One of our PPSA experts would be delighted to assist you.
Questions? Call us on 1300 544 755.