Ensuring that your security interests are effective, which can be achieved by prompt and correct registration on the Personal Property Securities Register, is vital. The following points must be considered:
- Who has ownership of the collateral (the property) over which the security interest is claimed? Ascertaining ownership is important and it must be determined whether the collateral is owned by an individual, a company, or a trustee in that capacity.
- In circumstances involving collateral owned by a person or entity in its capacity as trustee, it must be remember that any security interest has been granted by the grantor in that capacity. Parties seeking to ensure that their rights as a secured party are adequately protected need to be aware that:
- The registration of the security interest is effected against the ABN that is allocated to the enterprise/business carried on by the trustee in that capacity; and
- The security interest should also be registered against the ACN of the trustee (if it is a company) or the individual, whichever the case may be;
- A failure to register a security interest correctly against the ABN held by a trust may lead to a situation in which your security is not effective against a Secured Party who subsequently registers against that ABN. Such an outcome can occur even if the client has a security interest registered against the ACN that predates the later ABN registration by the other Secured Party. If a trust does not appear to have an ABN then consider registering your security interest against the name of the trust.
- When conducting searches of the Personal Property Securities Register to discover security interests, make sure to use wide terms of reference, for example:
- Where the search involves a motor vehicle, consider undertaking a manufacturer search in addition to a VIN or chassis number search;
- Search for an ABN and/or ACN.
Understanding your rights and obligations under the Personal Property Securities Act 2009 is critical for any business buying or supplying goods on credit. A failure to understand one’s obligations and rights can lead to a scenario in which you become an unsecured creditor rather than one with priority.
Please note that the above does not constitute legal advice and Irish Bentley Lawyers make no representations or warranties as to the accuracy of any of the information contained herein. If you have an issue relating to security, then please do not hesitate to contact the team at Irish Bentley Lawyers – there is no substitute for proper legal advice based on your unique circumstances.