Agricultural Law : The PPSA : Register it Quickly and Properly or Risk Losing it.
Are you aware of the registration time limitations imposed by the PPSA and CA (Corporations Act 2001)?
If a party goes into administration, unfortunate and expensive situations can arise from the usual practice of buying and selling agricultural products, specifically if these products, including cattle and crops, are not registered under the PPSA (Personal Property Securities Acts 2009).
A del credere agent will give surety to the seller that a buyer will have sufficient financial provisions to pay the seller. In the event of the buyer defaulting on a payment, the agent assumes the responsibility of paying the seller. Recent case studies have shown that all parties, (buyers, sellers and del credere agents) risk losing their priority on these products , if they are not registered, or not registered in time. Under section 588FL(2)(b)(ii)of the CA, a party only has 20 business days from the date of contract of sale to register it’s security interest. Any parties that have been assigned security interests must verify that the interest has been registered in time under the PPSA and CA.
Owners, who run livestock under an Agistment agreement, run the risk of becoming an unsecured creditor, should a PPS lease arise. Similarly with crops, a buyer will simply become an unsecured creditor if with no rights to the crop, if they don’t properly register with PPSA.
When it comes to protecting security interests, never assume reliability based on past dealings. Even if the buyer has paid previously and the transactional relationship has been successful, strict compliance with the PPSA and CA is still essential.
If you are unsure whether any of your business activities are exposed under the PPSA or CA, please contact us on 4617 8777.