What Is the Personal Property Securities Register (PPSR)?
Personal Property Securities Register (PPSR) is an online, widely published record of any legal claims to personal property used as loan collateral in Australia. The Australian Financial Security Authority, a government agency, oversees the PPSR.
As of a law effective in 2012, the PPSR supersedes national, state, and territorial registers and places all of the personal property information into a single database.
- The PPSR is an online database and centralized repository of personal property, from cars to homes to artwork, that can be used as loan collateral in Australia.
- The government charges a small fee for PPSR searches and collects fees to register or amend information related to it.
- Failure to register property claims can lump small business owners in with unsecured creditors in the event that a third party declares bankruptcy.
Understanding Personal Property Securities Register (PPSR)
Personal property includes a lengthy list of items, such as boats, artwork, automobiles, inventory, livestock, and crops. It also includes some intangible items such as intellectual property, investments, and licenses. It's essentially all property except for real estate, and it can all be registered on the PPSR.
The value of the PPSR is that it's a central repository of information about who may have an interest in an asset. Say a person is buying a used car. The buyer can check the PPSR to be sure that no one else, such as a lender, has a claim to that same car. If a lender did have a claim to the car and the seller didn't disclose it, this lender rightly could repossess the car once it stopped receiving car-loan payments.
In addition, banks can use the PPSR to note their interest in a borrower's personal property. If the bank that owns that same car registers its interest in the vehicle, it theoretically has a better chance of recovering the asset if the borrower goes bankrupt.
The government charges a small fee for searches on the PPSR, and it also collects fees to register or amend information. PPSR data is also considered useful as an economic indicator. Australia's financial services authority estimates that PPSR supports 24% of the country's GDP. It is also used as a broader indicator of the types of collateral used to secure credit.
The Importance of the PPSR For Small Businesses
Understanding the impact of the PPSR and registering property is an important part of doing business in Australia. The system is designed to protect not only banking institutions regarding their property claims but also rural farmers, small business owners, contractors, and the like. Unfortunately, the banks tend to remember to register all bank assets, while others sometimes do not. This arguably puts the banks at an advantage.
Small businesses must understand how the PPSR establishes creditor priority when it comes to multiple groups that have claims for a single asset. Again, failure to register property claims through the PPSR sometimes hurts small businesses owners who are either too busy or simply don't understand the importance of registering their property on the database. Failure to register property claims can lump small business owners in with unsecured creditors in the event a third party declares bankruptcy.
The PPSR is supposed to be simple and inexpensive for everyone to register online. However, a web search for the PPSR site also turns up private services that charge fairly steep fees. Those who don't know how to go to the PPSR site directly sometimes end up paying unnecessary costs to have a third party register property on their behalf.