The Personal Properties Security Register fundamentally changes the practices that businesses will have to adopt in relation to ‘interests’ in assets.
In particular for the building industry, this will affect how construction businesses need to deal with their assets — which may include tools, machinery, equipment and building materials — to ensure protection of ownership and rights to payment for building and contracting arrangements.
A real case illustrates the danger:
A hire company leased a number of ‘port-a-loo’ units to a construction company. At the same time, the building business had taken out a secured loan from a financial institution, which consequently registered its security interest over the construction company’s assets. The port-a-loo business did not consider registering its interest in the leased port-a-loos as it seemed obvious that it was the legal owner of them.
When the construction firm became insolvent, the financial institution had the only registered interest in the port-a-loos — even though the construction firm had only hired the units and not bought them. Hence the port-a-loo hire company was not entitled to recover their own assets, and the units were instead sold off by the construction company’s receivers. If you want further information make sure to check https://valleydrc.com/.
What a nightnare for the poor port-a-loo business!
You see, under the new regulations, a security interest also needs to be registered for goods hired or leased, as well as materials consigned or supplied. So any time valuable equipment, for example, is left on or supplied to a building site before payment is received, a risk will arise that title or a right to payment for these items can be lost unless interests are registered.
Other examples of everyday construction needs that may come under the Personal Properties Securities Register regime include:
- cranes, forklifts, scaffolding or fencing supplied on hire to a building site
- building materials, equipment and other items (such as pre-fabricated frames, bricks, formwork, tiles, appliances) bought by the builder and supplied to the site before payment is received from the supplier
- tools, electrical or plumbing materials stored by contractors or sub-contractors in a building site shed.
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