Since its introduction in 2012, the Personal Properties Securities Register ("PPSR") has created a lot of confusion for many businesses. It is crucially important that you understand how the PPSR affects your business so that you are in the best position to protect it.

What is the PPSR?

The PPSR is a national register of security interests held in personal property, and was introduced under the Personal Property Securities Act 2009 (Cth) ("PPSA"). Personal property is any property other than land, and includes vehicles, art, cattle, shares, and copyright.

Selling Goods

You have a contract in place with another business to supply goods, with the contract having a retention of title clause. This clause allows your customer to take physical possession of goods. However, ownership of the goods remains with you until the goods are paid for in full. This means your goods are protected in the event that your customer becomes insolvent, right?

Unfortunately, this is no longer the case. If your customer is about to go into liquidation and there is another party with what is called "a perfected registered interest" on the PPSR then they will take priority over any unregistered interests. You would become an unsecured creditor, and there is a risk that your goods could be sold to pay creditors.

We note, in order to register on the PPSR, there must be legal grounds to do so, such as an agreement or contract which gives rise to an interest.

You can 'perfect' your interest on the PPSR through three different methods, including possession of the secured goods, control of the secured goods, or registering a finance statement through a Personal Money Security Interest ("PMSI"). A PMSI is often used for consignment transactions, for loans or credit to purchase goods, or for leases or bailment of goods exceeding one year. A PMSI allows a party to have priority over unpaid amounts (whether all or part of the purchase price), meaning you can defeat all other security interests in the goods.

The time for registering an interest is crucially important, 'as the first in time equals first in line'. Further, if you do not register your interest within the strict time lines under the PPSA, then your interest may not be protected. It is better to register your interest as soon as it arises such as after signing an agreement, rather than waiting for goods to be delivered. Also, waiting until your customer shows signs of financial distress to register your interest is very risky, as it may be too late for you to become a secured creditor.

Another benefit of registering your interest on the PPSR is that it can help to protect your interest in the event that the goods are sold to third parties or if they are incorporated into other goods.

Buying Goods

Before purchasing goods, you should search the PPSR to make sure the goods are free from encumbrances. For example, goods may be held for security by another company or business. Of course, while not all interests will necessarily be registered, it is still recommended that a search be completed, preferably the day of or the day before you purchase the goods. If you were to search for certain goods, such as a motor vehicle by its serial number, then a search should also be made of the company or business which has a security interest in the motor vehicle.

Any Tips

Identify what transactions your business enters into which may give rise to PPSA rights or obligations with suppliers, customers, tenants, and others
Carefully review your contracts with customers and ensure they allow you to register your security interests
Ensure you comply with the strict time restrictions under the PPSA. Do not wait until your customer is in financial distress before you register your security interest
Conduct searches on the PPSR for both potential and current customers in order to assess their liability position
When registering your security interest on the PPSR, make sure all the details are correct (including spelling and no typographical errors) as any mistakes could invalidate your registration.

As Accredited Specialists in Commercial Law, our legal team can assist busineses and individuals in matters relating to the PPSR. We provide fixed prices and offer substantive free benefits to all customers who run a business. Click here for full details. Call Sharrock Pitman Legal today on 1300 205 506.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

Written by a member of our Legal Team

For further information contact

Mitchell Zadow

Mitchell is the Managing Principal of our law practice.

He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate. For further information, contact Mitchell on his direct line (03) 8561 3318.

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Since its introduction in 2012, the Personal Properties Securities Register ("PPSR") has created a lot of confusion for many businesses. It is crucially important that you understand how the PPSR affects your business so that you are in the best position to protect it.

However, in this article we will set out the factors that influence how long it will take to obtain a Grant of Probate and to administer an estate in Victoria.

The basics

First things first: what is a Grant of Probate? A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will. Without Probate, the asset holders (say a bank or share registry) cannot be satisfied as who has the correct authority to receive the deceased's assets and may refuse to pay out.

Sometimes, for smaller estates or if assets are mostly jointly owned with a surviving spouse, asset holders might agree to release payment without requiring a Grant of Probate. This is usually on the basis that the person who receives payment promises to repay (or Indemnify) the asset holder if it turns out they paid to the wrong person.

If there is no Will, then you cannot obtain a Grant of Probate. Instead you obtain Letters of Administration. This is effectively the same, in terms of authorising someone to administer the estate, and would usually be obtained by the person who is the closest next-of-kin to the deceased.

“A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will.”

Timeframes for Probate in Victoria

In order to obtain a Grant of Probate, the Supreme Court needs to be given information about the assets and liabilities of the estate, the deceased person, the witnesses to the Will, the executors and the Will itself. An advertisement of your intention to apply for Probate must also be published on the Supreme Court website for at least 14 days prior to any application being lodged.

Often, making enquires to obtain all the necessary information can take a number of weeks. Also, you will need the Death Certificate for the application for Grant of Probate and possibly for making proper enquires regarding the assets and liabilities. Waiting for the Death Certificate to issue can therefore add a few more weeks to the process. Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.

The Court itself usually does not take long to process the application (maybe another 1 to 2 weeks) and this is completed using the electronic Supreme Court filing system. This means you do not have to go to a Court hearing. The timeframe for processing applications for Letters of Administration is even less, given that there is no Will document for the Court to consider. There is also a general discretion for the Court to raise a 'Requisition' asking for more information before they review the application - this can sometimes delay matters.

“Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.”

So, here we are a few months after death and you finally have a Grant of Probate or Letters of Administration. It is important to remember that this is the start of the estate administration and not the end. For a very simple estate, you might only need a further month or so to cash the assets and pay them to the correct beneficiaries. However, it can often be more complex than that. Factors that determine the timeframe to administer the estate include:-

Some assets will take time to cash or transfer. For example, if selling a property, final settlement might be 60/90/120 days from the day of sale.
There is a 6 month period for challenges to be brought against the estate and executors must wait until this period expires before distributing the estate, if there is any risk that a disgruntled family member might come forward.
There might need to be final tax returns for the deceased or for the estate. Failing to wait for the ATO to process these could leave the executor personally liable for a tax bill.

You might need to advertise for creditors to come forward and wait for a period of months while this advertising timeframe expires. This protects the executor if they are unsure of all of the deceased's financial dealings and creditors.
It might not always be a good time to immediately cash estate assets. For example, the shares just took a nose-dive, do you still sell regardless of available price?

There is a general rule that executors have an 'executor's year' to complete the estate administration. This means that you should be aiming to have the estate finalised and distributed within 12 months from the date of death.

Liability limited by a scheme approved under Professional Standards Legislation.

Need help with Probate?

Our expert legal team is ready to take your call!

Mitchell is the Managing Principal of Sharrock Pitman Legal. He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:

DIRECT LINE:

(03) 8561 3318

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The Personal Properties Securities Register ('PPSR')

Since its introduction in 2012, the Personal Properties Securities Register ("PPSR") has created a lot of confusion for many businesses. It is crucially important that you understand how the PPSR affects your business so that you are in the best position to protect it.

What is the PPSR?

Selling Goods

Buying Goods