The shapes a loan’s security takes on the register
A registration describes the property by a collateral class, and the class is fixed once the registration is confirmed. For a business borrower, three kinds come up most:
- All present and after-acquired property
- Known as an All-PAAP, it describes all of a grantor’s current and future personal property, with or without listed exceptions. The PPSR likens it to the old fixed and floating charge, and says businesses often grant one to their main financier under a general security deed.
- A particular asset
- A motor vehicle, or “other goods” such as machinery, printers or coffee machines. For property registered as commercial, the vehicle’s serial number is optional for the lender.
- Accounts
- An obligation to pay, such as book debts customers owe for goods or services already supplied, or a business’s credit card receivables. This is the class behind finance against invoices.
Property is generally consumer property only if an individual holds it and does not use it to carry on a business under an ABN; otherwise it is likely to be commercial. The difference matters below.
The copy the business is sent, and the clause that can waive it
Each time a lender creates, changes or ends a registration, the PPSR issues a verification statement: the legal record of what the registration says and when. The lender must send a copy to each grantor named in it, as soon as reasonably practicable.
There is one exception, and it sits in the loan papers. A lender need not send the copy if the property is described as commercial and the grantor has already agreed in writing that it need not; the PPSR notes this agreement may be part of the lender’s standard contract. A business that wants the copies can look for that clause before it signs.
Where the grantor is an individual, the lender must also keep that person’s date of birth off the copy sent to any other grantor.
When the loan is paid off
A lender whose interest has ended, for example because the last repayment has been made, must end (discharge) the registration, and must do it in a timely way. The PPSR’s guidance is that registrations should be ended as soon as practicable, generally within five business days of the interest ending. Ending one produces a verification statement the lender can use to tell the grantor.
A lender’s registration that outlives the loan
For a business borrower, the usual case is a registration left in place after the loan is repaid or refinanced, or one that names more property than the security covered. The PPSR’s answer is the amendment demand: a request sent to the lender at the address for service shown on the registration. If the lender has not removed or changed the registration after at least five business days, the business can ask the Registrar for help at no cost, or apply to a court. Only someone with an interest in the property, such as its owner, can use the process to have a registration removed.
The PPSR sets out each step, the form to use and a sample demand on its own page: dispute a PPSR registration.
What the Registrar cannot decide
The Registrar decides only about the registration. It cannot rule on whether a contract term binds, which security interest ranks first, or, except in specific cases, remove an interest because it ranks lower. Those wider questions are for the parties or a court.
Misusing the register, such as making a false registration on purpose, can lead to an investigation, civil penalties and criminal charges.