When it comes to the Personal Property Securities Register (PPSR), we can’t help but ask: “It’s been six years – what have we learnt?”

To address this, Madgwicks is publishing an informative series of articles over the next few weeks for those of you currently using the PPSR and those who may need to register the occasional dealing. The aim of these 6 articles is to help you better understand how the Personal Property Securities Act (PPSA) applies to you and to avoid the common pitfalls in registration.


In brief

A purchase money security interest (PMSI) is a particular type of security interest which receives a super priority under the Personal Property Securities Act Cth 2009 (PPSA).  It is therefore very important to ensure that your security interest is correctly registered as a PMSI if it meets the criteria to take advantage of this super priority as well as being aware of the serious consequences that come with getting it wrong.

What you need to know

  • A PMSI has a ‘super priority’ which defeats all other registered security interest in the collateral. This includes security interests created and registered before the PMSI.
  • There are certain registration requirements which must be complied with in order for the PMSI to benefit from the super-priority.
  • If you have a PMSI, it must be stated when you first register your security interest as you cannot amend your registration later to a PMSI.
  • If you register your security interest as a PMSI and it is not, your entire registration may be invalid.

When do PMSI’s arise?

A PMSI includes the following:

  1. Where a loan or credit is provided to purchase goods;
  2. Where goods are supplied prior to receiving payment for the goods and the supplier takes security over the goods;
  3. Where goods are provided by a bailor or lessor under a PPS Lease and security for payments due under the lease is taken over the leased goods; and
  4. Where a person delivers goods to another person for the purpose of selling or disposing of the goods on their behalf.

Importantly, a PMSI will not lose its status if the payment obligation is renewed, refinanced, consolidated or restructured. This is even the case where the refinancing occurs by a different party.

 When does a PMSI not arise?

The following are examples of where PMSI will not arise:

  1. Where the interest is acquired under a transaction of sale and lease back to the seller;
  2. Where the interest in collateral is chattel paper, an investment instrument, an intermediated security, a monetary obligation or a negotiable instrument; or
  3. Where the collateral is used predominantly for personal, domestic or household purposes, except if the collateral is permitted to be described by serial number i.e. motor vehicles, aircrafts and watercraft.

How to receive ‘super priority’?

Where the collateral is inventory, a PMSI may have priority over a security that is not a PMSI if:

  1. the PMSI is in inventory or its proceeds;
  2. the PMSI is perfected by registration at the time:
    1. for inventory that is goods – the grantor, or another person at the request of the grantor obtains possession of the inventory; or
    2. for any other kind of inventory – the PMSI attaches to the inventory; and
  3. the registration that perfects the PMSI states that the interest is a PMSI.

Where the collateral is not inventory, a PMSI may have priority over a security that is not PMSI if:

  1. the PMSI in is personal property, or its proceeds, other than inventory;
  2. the PMSI is perfected by registration before the end of 15 business days after whichever of the following days applies:
    1. for goods – the day the grantor, or another person at the request of the grantor, obtains possession of the property;
    2. for any other property – the day the interest attaches to the property; and

the registration that perfects the PMSI states that the interest is a PMSI.


It is important to know what type of security interest you have, and in particular whether it is a PMSI. If it is a PMSI, make sure you correctly identify and register this security interest within the strict timeframes to ensure you obtain ‘super priority’ and maximum protection for your interest.

If you have any queries about PPSR or PMSI, please contact Catherine Ballantyne, Special Counsel at Madgwicks Lawyers on 03 9242 4780 or catherine.ballantyne@madgwicks.com.au.

About the Author

Catherine Ballantyne

A business disputes specialist, Catherine is a trusted advisor to businesses and individuals in obtaining successful outcomes. Businesses rely on Catherine as a trusted advisor as well as lawyer in guiding them through complex litigation and disputes.

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