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Personal Property Securities Act – the terminology

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Our recent articles have discussed the impending introduction of the Personal Property Securities Act 2009 (PPSA) which will introduce new rules that govern how security interests are created and enforced.   In this article we provide you with a glossary of the new terminology.

Personal Property

Personal property means anything that can be owned, traded or otherwise treated as property (including a licence) and covers:

  • goods and inventory
  • motor vehicles, aircraft and watercraft
  • financial property (including cash, bank accounts and financial instruments)
  • agricultural property (including crops and livestock)
  • intangible property (including intellectual property and licences of intellectual property)
  • certain personal and/or contractual rights
  • proceeds of personal property.

Personal property is not property that is land, a fixture (ie property that is attached to the land such as in-built refrigerators, lifts and air-conditioning systems) or a water right.


A grantor is a company, individual or other entity that has the rights or the power to transfer a securitry interest to the secured party and provides value for the security interest (ie the grantor is usually the borrower).

Grantors include:

  • those who use their personal property as security for a loan (eg a car loan)
  • those who use their business assets as security for a loan (eg a fixed and floating charge)
  • customers who receive property from suppliers under a retention of title arrangement, or
  • those who lease personal property from another party for an extended period of over 12 months (eg the hire of equipment).

Secured party

A secured party is the party (a company, individual or other entity) that has a security interest in the grantor’s collateral. This includes:

  • fixed and floating charges
  • long term and finance leases
  • chattel mortgages
  • retention of title arrangements
  • commercial consignments, and
  • factoring.


Collateral is the description of the personal property to which a security interest is attached. The PPSA requires that collateral must:

  • be described according to the legislated categories
  • identify whether it is either consumer property or commercial property, and
  • identify whether or not it has a serial number (if required, eg in relation to a motor car).


Perfection occurs when a security interest has attached to collateral and any further steps needed to make the security interest effective against third parties have been taken. It is achieved by varying means, but the most important way is via registration of the security interest.

Security Agreement

A Security Agreement is an agreement between the secured party and the grantor which details the agreement to create the security interest. From this agreement a finance statement is created and this provides “notice” of the security agreement.


A security interest is enforceable against a grantor when it attaches to collateral. A security interest is enforceable against third parties when it has attached to the collateral and either the secured party has possession or control of the collateral, or a security agreement covers the collateral.


Registration of a financing statement is required to achieve perfection of the security interest. Every time a secured party registers an interest, they will be required to pay a fee. The electronic Register will be easy and inexpensive to access and search. It should be noted that the Register is transparent (ie confidentiality may be lost). Paper registration will also be available.

The PPSA will not require the security agreement that creates the security interest to be lodged on the Register. Instead, the financing statement is registered on the Register. A verification statement is provided which sets out the data that was registered and confirms the registration time.


The first to register a security interest will have priority in competition with another interest in collateral.

Purchase money security interest (PMSI)

A PMSI creates a super priority that attaches to collateral that is being leased, purchased, on consignment, or where funds are borrowed to directly acquire the collateral.

PPS lease

A PPS lease is an operating or finance lease or bailment of goods for more than one year or an indefinite term, or 90 days for serial numbered goods. A PPS lease does not include arrangements where the lessor or bailor is not regularly engaged in the business of leasing or bailing goods.  A PPS lease would include agreements under which equipment or other goods are provided as part of a service and the customer has possession of the equipment.

Click here to view the article which reviews the Act.

Click here to view the article on preparing for the Act.

For further information on the Personal Property Securties Act contact one of our Corporate Advisory lawyers.

Author: Susan Reece Jones

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