It’s fair to say the PPSR registration process is highly complex. Or in the words of former Australian Small Business and Family Enterprise Ombudsman, Kate Carnell.
“At the moment, PPSR is hard to get right and easy to get wrong”
In theory, most businesses should be using the PPSR, however, the technical language and complicated nature of the process scares a lot of people off. One small mistake on your registration can mean the difference between a successful claim or no claim at all.
One of the most unforgiving aspects of the PPSR registration process is the absence of a registration review. At no time will the government check your registration to see if the information you’ve provided is correct. For many businesses, the first time they find out they’ve made a mistake on their paperwork is when they attempt a claim.
There are a few common mistakes when completing a PPSR registration, let’s look at the top 5 mistakes and what you can do to avoid them.
Top 5 PPSR Registration Mistakes
1. Claiming a security interest is transitional or non-transitional
The issue with transitional vs non-transitional security all comes down to timing. The PPSA commenced on 30 Jan 2012 making any security agreements existing before this date transitional security agreements. Any security agreements after 30 Jan 2012 are considered non-transitional. Mixing up the two can render your registration invalid.
2. Incorrect grantor identification
If a grantor is not identified correctly, it can void the PPSR registration. Some of the common mistakes include:
- Identifying a company by their ABN rather than their Australian Company Number (ACN)
- Using the ACN of the corporate trustee when the trust’s ABN should be used.
- Identifying a sole trader by their ABN rather than their name and date of birth.
- Not updating a PPSR registration when a grantor’s situation changes. Remember, updates must be made within 5 days of notification of the change.
3. Selecting incorrect collateral class
There are many different collateral classes, when making a registration on the PPSR you need to correctly describe the personal property you claim to have a security interest over.
After choosing your collateral type, you will select a collateral class. These commonly fall into motor vehicle, all present and after acquired property (All-PAAP) and other goods. The collateral classes are then grouped into four further categories:
- Tangible property
- General property
- Intangible property
- Financial property
4. Failing to claim a PMSI when the security is a PMSI
A Purchase Money Security Interest (PMSI) provides a creditor’s security interest with priority over any party’s security interest in the same property. If you fail to claim a PMSI when the security is a PMSI, your priority over the property will be lost.
5. Registering serial numbered goods
If you’re registering Motor Vehicles, Watercraft or Aircraft, they should be registered by serial number. Make sure you double and triple check your serial numbers because if one digit of the serial number is incorrect the entire registration will be ineffective.
How to avoid mistakes on your PPSR registration
As you can see, it only takes a minor error to void your entire registration. Using PPSR Cloud all but eliminates the chance of making an error. Using the PPSR registration templates, the process (which has long been described as complex and complicated) is now simple, safe and accurate.
PPSR Cloud also offers alerts to let you know when a registration is incomplete, incorrect, is about to expire or needs to be updated. That’s something you don’t get if you register directly through the government site.
If you want to ensure your PPSR registrations are correct and protect your business and property, contact PPSR Cloud. Take advantage of our free trial and see just how simplified the process is.
The information provided in this article is general in nature. PPSR Cloud are not lawyers and this is not legal advice. If you have missed the timing of your registrations, you should obtain legal advice on how to address the issue. Our suggestions should be treated as suggestions only and you will need to seek specific advice for your circumstances.