THE Personal Property Securities Act 2009 provides that individuals can now register security interests to protect their interests that were previously not registrable.
This is particularly important in agribusiness and can impact on your interests in livestock, crops, produce, machinery and equipment, and plant breeder’s rights.
It is vital to understand and remember that your ownership of property, such as livestock, will not prevent you from losing that property if you fail to register your security interest and the party that holds your property becomes bankrupt or insolvent.
Below are examples of common transactions that primary producers may be party to which give rise to a PPSA security interest:
If: You agist your livestock on a neighbour’s land for over a year, then you should register the security interest in your livestock
If: You own the land and agree to the agistment of your neighbour’s livestock on your land, then you should register your security interest to secure your right to recover unpaid agistment fees, as well as the value of the feed consumed by the livestock
If: You agree to sell feed to a cattle farm on credit terms in order to enable the cattle to be fed, secured by a security interest in the cattle which are held at the time the agreement is made or acquired within six months of the agreement, then you should register a security interest in the cattle and their proceeds
If: You lease your harvesting equipment and machinery to a neighbour for more than a year, then you should register the lease as a security interest
If: You lease a car to a neighbour for more than 90 days, then you should register the lease as a security interest
If: You supply your produce to a silo for storage on an indefinite term, then you should register a security interest
If: You regularly provide your cattle to a commercial feedlot where the feed lot will purchase the cattle at the conclusion of the feeding term, then you should register a purchase money security interest in the cattle against the commercial feedlot owner/operator
If: you are a del credere agent engaged in selling livestock (you act as agent for the seller and you guarantee the buyer’s payment to the seller), then you should register a purchase money security interest in the livestock against the buyer
If: You lease your bulls to provide stud services to other herds for periods of longer than a year, then the lease of the bulls will likely be PPS Leases and your security interest should be registered
If: you sell cattle to an abattoir and the sale agreement provides that you retain title in the cattle until the purchase price is paid, then you should register your security interest as a purchase money security interest against the abattoir owner
What if I don’t register?
Failing to register a security interest can mean that you lose your rights to your property. The fact that you own the property will not be enough.
If you lease, agist or otherwise give possession of your property to someone else and don’t register your security interest, and that person with your property becomes insolvent, then your property can be dealt with as if it were owned by that person.
Or if a third party registers their security interest and you haven’t, then you can lose your property to that third party.
Even if you and the other party are friends or family, you still need to protect yourself by documenting your arrangements and registering your security interests. This protects you against the other person’s financial problems or a third party registering its security interests.
You must register your security interests as soon as possible, and in any event, before the time required by the PPSA. Sometimes this may be before you give the goods to that other person.
Registering is easy and minimal cost, especially when compared with the value of your assets.
You should check whether you have a security interest and you should register your interests to protect yourself. It’s worth noting that there are strict time limits for a valid registration.
* Peter Kennedy is a solicitor with McCullough Robertson in Brisbane. Readers with questions or seeking some assistance in this area can contact Peter at [email protected]