This is Part 1 of a 3 Part guide on tips for loading on the Personal Property Securities Act is very complex in nature. A number of questions are often raised by our clients around how to load PPS Registrations to ensure they're valid and there seems to be a lot of misconception around why our clients cannot just load their interest on the Personal Property Securities Register regardless of the information they have.
It all comes down to the Terms and Conditions of Trade. The terms and conditions of trade form your security agreement with your customer. Without it, it's difficult to enforce your rights as a Secured Creditor. Without it, your PPS Registrations may be deemed invalid by a Liquidator or Receiver, if they're appointed.
Your Security Agreement e.g. a Credit Application must be PPSA compliant, be signed and accepted by both contracting parties and also contain a statement as to the property you can legally have a security interest in. You must have a legal right in the property in order for you to hold a security interest in the property e.g. If the customer defaults, you can't just load a security interest in their vehicle or other personal property because they haven't paid you. The PPSR doesn't work that way I'm afraid.
Tips for loading a valid security interest on the PPSR:
- Have you received a signed and dated security agreement?
Your business may have purchased terms and conditions from EC Credit Control and you've sent them out to all of your existing clients and made a company policy to get all new and existing clients to sign acceptance of your terms and conditions.
One of two things will happen;
- The terms will be returned
- The terms will not be returned
- What do you do with the terms and conditions?
- When the terms are returned:
- Ensure the documentation is signed
- If clauses have been amended or crossed out, could this now invalidate your security interest and what can you do?
- Customer has emailed you acceptance saying they have agreed to the terms but not signed the documents. Does emailed acceptance constitute a legal agreement that will secure your interest or is it imperative that you obtain a signed document?
- When the terms are not returned:
- A simple phone call should be made to your customer
- Is there a reason why they're not signing your terms?
- Is it because they do not understand what they're signing?
- They may have simply forgotten to return them
- Your customer continues to work/order with you without returning signed documentation. Are there any risks of accepting work this way?