If you’ve ever wondered what the Personal Property Securities Register (“PPSR”) is, and what the benefits of registering security interests are, this article sets out the basics that you should know.
What is it?
The PPSR, which was established as a result of the Personal Properties Security Act 1999, is a New Zealand government website that registers information about security interests over personal property (other than land). This information can be recorded, altered and searched through the PPSR website.
Why do I need to know about it?
It is particularly important to be aware of the PPSR if you are giving a loan and want to be able to recover the debt if the debtor ever defaults. Utilising the PPSR and registering a security interest will give you a far better chance of recovering that debt.
You can also search the PPSR when you are purchasing a car to check if any security interests have been registered against, it to avoid any nasty surprises!
Example:
Jane, who owns Apple Construction Ltd., is selling a piece of equipment worth $5,000.00 with payment due in monthly instalments over a 2 year period. 6 months in to the 2 year period, the purchaser stops making payments altogether, and Jane wishes to recover the debts by repossessing the equipment.
Because Jane had not registered a financing statement on the PPSR, she is an unsecured creditor. This means that if there are secured creditors also seeking to recover debt, they will be given a higher priority over Jane. If Jane had registered a financing statement, she would be given a higher priority and would therefore be more likely to be able to recover the debt.
How do I register a security interest?
To register a security interest you will need to sign up as a user on the PPSR website – full instructions on registering an account are available on the website. You will then need to register the Secured Party Group.
Once you have registered as a user and have set up the Secured Party Group, you will be able to register a financing statement which records the security interest. To do this, you will need to supply: an expiry date, the debtor’s details, collateral details and the Secured Party Group details.
Your contract with the customer needs to have a clause allowing the security interest to be registered. We can help with that and provide other input on contracts to keep you safe.
For further information:
If you have any questions in relation to PPSR, registering or searching for security interests, please feel free to get in touch with Steven Moe at stevenmoe@parryfield.com or on 03 348 8480. We have teams in Riccarton, Rolleston and Hokitika who would be happy to assist you.
