Asset Finance | How the PPSR works
The Personal Property Securities Register (PPSR) is an electronic database that records details of security interests in personal property. It covers almost any property a person (be that an individual or a business) can own, important exceptions being land (interests are held with the Land Registry) and ships over 24 metres or that are being taken out of the country.
The PPSR is essentially a public notice board of security interests. Before handing over any money lenders will check the register to see:
- Whether there are any existing security interests over the debtor’s collateral
- Whether another party is already using a piece of collateral as security – this means they will have priority over it in the event the debtor defaults on their loan
Lenders providing asset finance will register interest over assets they fund on the PPSR. Items on the register are often identified by their serial number or, in the case of vehicles, registration number or VIN.
This register can be searched in accordance with the Personal Property Securities Act 1999. It is available to the public to search 24/7, 365 days of the year, for a $3 fee.
Section 66 of the Personal Property Securities Act contains rules for determining priority between security interests in the same collateral. In most cases the first party to register has priority. If a creditor does not register a security interest and a debtor is adjudicated bankrupt or is placed into liquidation, secured creditors will be prioritised when payments are made or assets distributed.
You can and should search the PPSR before buying second hand plant, equipment or vehicles to check that there is no money owing and that any previous debt has been discharged.
Be aware, if you are renting or leasing equipment to a third party, your lease or rental agreement will often create a security interest that should be registered on the PPSR. If you fail to create this registration, you can lose your equipment to the party that has security over whoever is in possession of the gear.
Companies involved in renting or leasing equipment, even between related parties, should take particular care to ensure they are registering everything properly on the PPSR.
The PPSR can be found online at www.ppsr.govt.nz/cms.
At Finance New Zealand, we often provide information to our customers regarding the PPSR related risks to their businesses, however, we recommend you speak to your lawyer regarding any detailed questions you have.