Update of Personal Properties Securities Act 1999

The Personal Property Securities Act 1999 ("PPSA") came into force on 1 May 2002.

What is the PPSA?

The PPSA is legislation that reformed the law relating to security interests. A "security interest" means rights in personal property granted as security in a lending or leasing transaction.

In the Act, personal property is defined as all property other than land. All security interests taken in personal property are subject to the PPSA.

Generally, security interests need to be registered to ensure that they have priority over other security interests on a particular item of personal property. While registration is not compulsory under the PPSA, it does ensure priority over subsequently registered security interests.

Law Changes under the PPSA

The PPSA replaced the Chattels Transfer Act 1924, the Companies (Registration of Charges) Act 1993 and the Motor Vehicles Securities Act 1989. Some security interests that were not able to be registered under the previous law are now subject to the PPSA. Examples include hire purchase agreements, retention of title clauses in supply agreements, and finance and operation leases for a term of more than one year.

Personal Property Securities Register

At the heart of the legislation is a register called the Personal Property Securities Register (PPSR) which commenced operation on 1 May 2002. The PPSR is a form of electronic notice board recording specific details of security interests held in respect of personal property. Anyone can access the register online at www.ppsr.govt.nz. It is accessible 24 hours a day, 7 days a week.A security interest is registered with the PPSR by means of a "financing statement", that term refers to the data to be entered on the register. Registering a financing statement in the PPSR enables a security interest to be "perfected" which is critical to protecting the priority of security interests. The general rule under the PPSA is that the first to register a financing statement has priority.

Searching the PPSR

The register allows anyone to check if an individual or company has debts by entering the name and date of birth or address of the relevant person, or by specific collateral details such as vehicle registration, VIN and chassis numbers. However, it is illegal to carry out searches of the register without good reason. Any person attempting to search it out of interest only, could breach the Privacy Act. A degree of protection is provided by the requirement for people wishing to search the register being required to first register their details with the Companies Office in order to obtain a user ID and password.

Renewals

A security interests lapse after five years. No reminders are sent regarding these. Registrations can be renewed for a further five year (or lesser specified) period for a fee of $5.00 (GST included). The renewal needs to be completed before the original registration expires. The date from which the registration period begins is the date of renewal, not the original expiry date.

If a secured party fails to renew a security interest before the registration period expires, the registration lapses and priority on the collateral may be lost. If you are the holder of a security interest which was registered about five years ago, then now is a good time to check whether it needs to be renewed.

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