Personal Property Security Register and the construction industry

The introduction of the Personal Property Securities Act 2009 (PPSA) was a move by government to streamline the registration of securities over personal property. The Personal Property Security Register (PPSR) is a national, electronic register of security interests in personal property that was established on 30 January 2012.

How does the PPSR affect me?

If you have an interest over any personal property you need to register that interest on the PPSR in order to ensure that you have priority over any other claim.

Whilst the operation of the PPSR is by no means limited to the construction industry, there are a number of industry specific situations that can arise. Taking proactive steps to avoid any potential loss of interest is an important step in any construction project.

Construction industry-specific effects of the PPSR

If you are involved in a construction project that involves parting with possession of personal property including, for example, scaffolding, formwork, plant and other equipment, you would be wise to consider registering your interest as a matter of urgency on the PPSR.

Failing to register your interest on the PPSR could result in that interest being defeated at some later date if the party with possession, such as the owner of the site or the head contractor, manages to grant a later security interest in your goods or goes into liquidation. Your security interest might then lose out to another’s security interest over the same property, or in the case of insolvency, you will have to get in line with other creditors.

Temporary works

Temporary works such as formwork and scaffolding that are removed at the end of a project are examples of personal interests over property that should be registered on the PPSR.

Prior to the introduction of the PPSR, a contractor would simply rely on their legal ownership to protect their interest and remove these items at the end of a project. Now if you fail to register your interest in these or other temporary work items you may be in for a nasty shock at the end of a project. This is because the party in possession, such as the head contractor or site owner, sometimes passes title onto another purchaser. If that occurs and the new purchaser registers their interest on the PPSR, then you may well find that your interest in those goods is defeated by the new purchaser’s claim.

This is because registered claims take priority in many cases.

Retention of title

If a supply contract includes a clause providing that title to goods will not pass to the purchaser until full payment has been received, then because of the PPSA that clause is likely to mean that a security interest in favour of the supplier arises. Your interest will need to be registered on the PPSR if it is to be enforced against third parties.

Leasing equipment

If you own and lease goods and equipment for use on building sites you may be surprised to learn that legal ownership of the equipment may not be sufficient to protect your interest.

Under the operation of the PPSA, the lease may be considered to be a PPS Lease. Your interest in any goods or equipment covered by the lease will be deemed to be a security interest. A failure to register your interest on the PPSR could result in you losing ownership if another party uses those goods or equipment as security for another loan.

Principal’s rights on take out

It is not uncommon in construction contracts for the principal to be given the right to take over a contractor’s construction plant and works in the event that the contractor defaults on their portion of the construction contract.

The principal’s right to act in this way is likely to be considered a security interest under the PPSA. If you are a principal you must register your interest on the PPSR in order to ensure that you have priority over any other possible competing interests.

How can the PPSR help me on my construction projects?

The PPSR provides a national central register where you can record any interests you have in goods including plant or equipment, or in the case of principals, any rights to take out.

Very importantly, the PPSR also provides a useful resource for checking whether goods you may be thinking about purchasing or accepting as collateral are already encumbered with a debt or charge. This is particularly relevant if you are thinking of purchasing construction specific goods such as plant equipment including formwork or scaffolding that are currently located on a construction site. Check the PPSR to ensure that there is no prior interest registered in these goods prior to purchase.

The PPSR is also an excellent risk protection tool. If you find yourself on the other side of the table and are trying to raise funds for your business using your interest in plant equipment, including scaffolding and formwork as collateral for any loan, you may find that you are able to raise finance more easily because potential purchasers are able to check on the PPSR to confirm that the goods you are offering as collateral are not subject to a pre-existing loan arrangement.

A properly registered interest on the PPSR can mean that you are the first party in line to get your goods back if a party in possession attempts to raise funds using your plant equipment as collateral. This is a much more preferable position to be in at the end of what may be a very long queue of an insolvency process if your customer goes belly up, owing you and many others money.

Ensuring that registrations on the PPSR are correct and complete is also important. Our experienced lawyers can advise and assist you on all aspects of the operation of the PPSR and particularly how it can assist those working in the construction industry. If you or someone you know wants more information or needs help or advice, please contact us on +61 2 9248 3450 or email