PPSA and PPSR Explained

The Personal Property Securities Act 1999 ("the PPSA") has been heralded as the single most significant change to commercial law in New Zealand during the lifetime of any lawyer alive today. The Personal Property Securities Register ("the PPSR") provides the publicly available record through which this important change may be observed.

The PPSA will replace the Chattels Transfer Act 1924, the Companies (Registration of Charges) Act 1993, Motor Vehicle Securities Act 1989, and the Industrial and Provident Societies Amendment Act 1952. The PPSA will provide for one set of rules for security in all finance transactions, except those involving real estate. The PPSR will function as an electronic notice board accessible to any one on the Internet 24 hours a day, 7 days a week. The lender will register a "financing statement" which includes information concerning the loan, the borrower's name and the security details.

For lenders who register financing statements, it is important they take great care to ensure the accuracy of the information to be registered. As the PPSR will take the place of the four existing registers, the PPSR will hold a great deal of information. The information can only be searched by computer. Computers are very unforgiving in respect of spelling mistakes. Information entered which is incorrect will not be found by a later search which uses the correct information. Incorrect entries that cannot be searched could make the lender's security useless.

Reservation of title (Romalpa) agreements can be/must be registered under this new law to protect those type of security arrangements. The cost in time and money of establishment and maintenance of registry entries makes it likely that only sales of items worth more than $2,000.00 will be worth registering. More than ever businesses wanting to rely on this type of sale and security will have to accurately identify their customer. Those details and full, specific details of the goods sold must then be entered in the register.

Existing charges such as company debentures, loans on cars, furniture etc, must be re-registered on or before 1 November 2002 to maintain their validity and priority. If you have a secured loan you have made to someone, or a debenture from your company, then you must talk to us about having that registered.

Contact us or see the Government website for more information ( http://www.ppsr.govt.nz/pls/web/dbssiten.main) if you think this change will effect you.