Landlords – the effect of PPSR Registrations

Retail and commercial leases often include items of plant and equipment, chattels and other ‘personal property’ owned by the Landlord being made available for use by a Tenant (e.g. items of furniture, kitchen equipment, cool rooms, etc.). Unless the Landlord registers a security interest in those items with the Personal Properties Securities Register (PPSR):

  • those items owned by the Landlord may vest in the Tenant’s liquidator or administrator if the Tenant becomes insolvent; and
  • the Tenant’s liquidator could then sell those items contrary to the Landlord’s interest – e.g. to pay secured creditors of the Tenant (whilst the Landlord may still have a contractual claim against the Tenant, it will be an unsecured claim).

It makes no difference that the Landlord owns those items and has not transferred title to the Tenant.

As such, Landlords should register a security interest with the PPSR so that a liquidator cannot deal with its items – registration should occur within 15 business days of the Tenant taking possession of the items (to ensure the Landlord has priority over all other interests, including any mortgagee of the Tenant). Registrations should also be updated against a new Tenant when there is an assignment of a lease. Even if more than 15 business days have passed, we recommend that a Landlord still registers its security interest, because registration prior to a Tenant’s insolvency event will give the Landlord the best chance of preserving a priority claim over those items.

Page Seager Lawyers can prepare or review relevant lease documents and:

  • provide advice on registrations and the best ways for Landlords to protect their goods; and
  • undertake PPSR registrations for Landlords.

More information

If you have any queries or would like further information regarding this article, please contact:

Daniel Morgan
M: 0438 436 968

Justin Hill
M: 0418 578 701

Published: 2 November 2023

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