Personal Property Security Register (PPSR)
Since 30 January 2012 wine grape growers have had the ability to register the grapes or wine that they supply for sale on the Personal Property Security Register (PPSR). This provides potentially greater security in the event of the buyer not being able to meet their financial obligations.
The PPSR is an on-line register, available 24 hours a day, seven days a week. It replaces all Commonwealth, state and territory registers of security interests in personal property and the old 'Retention of title' or Rompala clauses.
A person supplying, selling or leasing goods (e.g. a grape grower) registers a Personal Money Security Interest (PMSI) over the goods on the PPSR. A PMSI can be applied to almost any personal property except real estate and fixtures (e.g. buildings, water rights).
Registering a PMSI requires the agreement of the supplier and the purchaser – typically this would be a written contract. It only applies to transactions that require payment for goods or the performance of an obligation (e.g. processing into wine). Contracts must have clauses reflecting that the Personal Goods are to be registered.
Click here to download sample template clauses for inserting into contracts.
The PPSR is an on-line register, available 24 hours a day, seven days a week. It replaces all Commonwealth, state and territory registers of security interests in personal property and the old 'Retention of title' or Rompala clauses.
A person supplying, selling or leasing goods (e.g. a grape grower) registers a Personal Money Security Interest (PMSI) over the goods on the PPSR. A PMSI can be applied to almost any personal property except real estate and fixtures (e.g. buildings, water rights).
Registering a PMSI requires the agreement of the supplier and the purchaser – typically this would be a written contract. It only applies to transactions that require payment for goods or the performance of an obligation (e.g. processing into wine). Contracts must have clauses reflecting that the Personal Goods are to be registered.
Click here to download sample template clauses for inserting into contracts.
Advantages of registering a PMSI for wine grape growers:
- Grape growers are typically unsecured creditors. This usually means that if a processor becomes insolvent debts are first paid to secured creditors (e.g. the ATO, banks, etc.) and whatever is left is divided amongst the unsecured creditors – frequently nothing is paid. Assuming the registration is completed in accordance with the regulations, the consignee has ‘super priority’ in terms of recovering any outstanding debt from the receiver or liquidator.
- A grape grower selling grapes to a winery will only ever need to register its PMSI once for each processor to secure all future deliveries (including the proceeds of sale).
- It may make borrowing money easier because the lender has the option of using your crop as security
- You can search the register to check if property (e.g. a tractor) has a registered security interest over it before you commit to purchasing it
Disadvantages of registering for a PMSI for wine grape growers:
- It requires the agreement of the processor to include a Retention of Title clause in the grape contract
- The process can be complex and the terminology is difficult to understand.
- While the fees for using the PPSR are not very high, most growers are likely to need legal assistance in reviewing a contract and registering the PMSI
Steps in registering your Personal Goods
- Determine if your Personal Goods (grapes or wine) warrant attaching a PMSI. This will be influenced by the value of the grapes or wine (e.g. can you continue if you don’t get paid), your confidence in the ability of the purchaser to pay, the willingness of the processor to agree to a PMSI clause in your contract and the time and cost of registering
- Arrange for a new PMSI clause to be inserted into your contract (see sample clauses). This should be finalised before grapes or wine are delivered. NB if you already have a Retention of Title clause in your contract it is important that you register it on the PPSR website.
- Register the PMSI – this is essential to ‘perfect’ (finalise) the process. In the case of inventory (e.g. grapes) this must occur before the goods are delivered. Registering after will not invalidate the PMSI, however, its “super priority” status will be delayed if not defeated by another secured party;
- Give a copy of the Verification Statement to any grantor listed in the registration immediately before or after the registration event. See Section 157 of the Personal Property Securities Act 2009 (PPS Act).
More information
Visit www.ppsr.gov.au or download the Guide to selling wine grapes in South Australia booklet.