Wednesday, January 12, 2011

New Law For Personal Property

New Law For Personal Property - The Personal Property Securities Act

Personal Property Securities Act 2009 (Cth) (“the PPS Act”) is a new law about security interests in personal property which will apply Australia wide.

The PPS Act has been enacted, proclaimed and is due to come into effect in May 2011.

The new law will affect more than 70 existing Commonwealth, State and Territory laws administered by more than 30 different agencies. The aim of the PPS Act is to provide a single national law covering all aspects of secured lending in personal property, including when a security interest is created, which interest has priority and default rules for enforcement.

Personal property is basically all property except land and buildings, with some exclusions, such as water rights. It includes not only tangible property such as motor vehicles, plant and equipment, art, inventory, crops and livestock, but also intangibles such as intellectual property, receivables, contractual rights and shares.

The PPS Act takes a functional approach to secured lending in personal property. It applies to all security interests that secure payment or the performance of an obligation regardless of the form of the transaction, the legal personality of the grantor or the jurisdiction in which the property or the parties are located.

The new legislation covers security interests commonly recognized, such as charges and mortgages, and also covers some arrangements which are not currently considered to be security interests, such as retention of title arrangements and financing leases.

The PPS Act will discard the current notion of a fixed and floating charge in favor of a charge over circulating and non-circulating assets. The concept of crystallization relevant to floating charges will also be abolished.

The new regulatory scheme will be underpinned by an online register, being a single, national, electronic notice-based register of security interests, accessible 24 hours a day.

The register will act as a “noticeboard” of security interests, and will not be a register of documents.

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