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

What is the PPSA?

The PPSA is new legislation that reforms the law relating to security interests (e.g. loans, etc.) in personal property. Many people would be aware that it has been possible for car buyers to check online whether money is owned on a particular vehicle, but until now a comprehensive register for recording finance on items such as whiteware and furniture was not available. That has now changed with the PPSA.

In the Act, personal property is defined as almost all property other that land. From 1 May 2002 all security interests taken in personal property will be subject to the PPSA.

Generally security interests will need to be registered to ensure that they have priority over other security interests on a particular property. While registration is not compulsory under PPSA, registration will generally ensure priority over subsequently registered security interests.

Law Changes under the PPSA

The PPSA replaces the Chattels Transfer Act 1924, the Companies (Registration Charges) Act 1993 and the Motor Vehicles Securities Act 1989. The significant difference between the PPSA and the previous law is that the form of security taken is no longer relevant and the same rules will apply to all types of security arrangements. Some security interests that were not able to be registered under the previous law will now be subject to PPSA, for example, hire purchase agreements, retention of title clauses in supply agreements, and finance and operating leases for a term of more than one year. Registration of these types of agreements and leases will be necessary to ensure the priority of security interests.

Personal Property Security Register

At the heart of the new legislation is a searchable register called the Personal Property Securities Register (PPSR) which commenced operation on 1 My 2002. The PPSR is a form of electronic notice board recording specific details of security interests held in respect of personal property. You can access the register online at

The PPSR will replace The Motor Vehicle Securities Register, The Chattels Registers at the High Court; and The Register of Company charges at the Companies Office. These “existing registers’ closed for registration on 30 April 2002. Where possible, secured parties on the existing registers have been contacted by the Ministry of Economic Development to explain how the new PPSR will affect them.

Secured parties will now register security interests in the PPSR with a standard financing statement. Registering a financing statement in the PPSR is one way of perfecting a security interest. Perfection will be 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.

The Transition Period

The wide definition of personal property under the PPSA means that not all affected securities, for example mortgages of shares, are currently registered in an existing register. It is important for holder of security interest to identify those security interests which were not able to registered previously and to register those interests with the PPSR during a six month transitional period expiring on 31 October 2002. Retailers and other creditors have until October to finish transferring to the PPSA details of finance outstanding on property they have previously sold. Records which aren’t transferred by then will be wiped.

Consumers and business will still be responsible for honouring any outstanding payment in such circumstances, but suppliers would lose their priority with other creditors if the items were seized to pay other debts. Because prior security interests are not deemed to be “perfected” until the end of the transitional period, searching will need to be conducted over the old registers and new PPSR for the duration of the transitional period to get a complete picture of all security interests. From the end of the transitional period the PPSR will be the only register to search.

Retention of Title Clauses

Registration of retention of title provisions in contracts for the sale of goods will be greatly affected by the PPSA. Provided the interest is registered in time, it will have priority for any amounts owing for the purchase price of the secured property. This priority will prevail over the other creditors with security interests in the same property irrespective of when those interests were given registered.

Searching the PPSR

Basically the register will allow anyone to check if someone has debts recorded 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, according to the Ministry of Economic Development under the PPSA it is illegal to carry out online searches of the register without good reason. Therefore people who check on friends and neighbours out of interest could breach the Privacy Act. You are given some protection due to the fact that people wanting to search have to register their details with the Companies Office to obtain a User ID and Password.

Key Points for Holders of Security Interests

  • The PPSA affects a wider range of transactions than existing law e.g. retention of title clauses.
  • Make sure that your terms of trade and loan documentation is altered in line with the PPSA.
  • Ensure that you have all the necessary information to register prior and new security interests.
  • Register new security interests in the PPSR.
  • Ensure that all prior security interests are registered in PPSR before 31 October 2002.
  • The Maximum registration period for a financing statement is 5 years.
  • Search existing registers and the PPSR during the transitional period.

Key Points for Debtors

  • Information on all security relating to personal property except land will now be stored in one place – the PPSR.
  • Subject to privacy restrictions, the PPSR can be searched by debtor name and other details such as vehicle registration numbers.
  • People should search the PPSR before purchasing goods that may be subject to a security interest.
  • Secured parties must supply debtors with a copy of a verification statement, unless the debtor waives in writing their right to receive one.
  • Debtors can use the debtor PIN contained in the verification statement to demand corrections to a financing statement.

In Summary

The PPSA is a new law that commenced on 1 May 2002 and affects a wide variety of financial transactions. If you think that you might be affected by the law change or your business needs to alter its terms of trade in line with the PPSA, please contact us, we’re only too happy to assist.

DISCLAIMER: All information in this newsletter is to the best of the authors’ knowledge true and accurate. No liability is assumed by the authors, or publishers, for any losses suffered by any person relying directly or indirectly upon this newsletter. It is recommended that clients should consult a senior representative of the firm before acting upon this information.