According to TurksLegal commercial law partner Daniel Turk, the firmed-up start date gives businesses the certainty to plan for substantial changes that will dramatically transform current rules about personal property ownership.

“Imagine the existing REVS motor vehicle register in NSW which records details about cars used as security for a bank loan. Then expand it multiple times over to include all kinds of tangible and intangible personal assets, from goods and equipment, to debts, contractual rights and intellectual property – and you have an idea of how all-encompassing the national PPS register will be”, Daniel says.

“When the PPS regime kicks in next month, businesses need to understand that if their security interests in property are not properly registered, existing security arrangements such as retention of title clauses, leases, rental or hire purchase arrangements, will not be enough to protect them from unauthorised dealings with the assets.

“Competing claims over assets from registered security-holders, such as the customer’s bank will take priority. Even equipment that’s left or lent out to someone else or is physically located on another person’s premises will be vulnerable.

“The scale and impact of the new PPS regime is so great that it’s bound to catch out any business which has not carefully reviewed how it will be affected and made changes to processes and documentation to protect security and ownership rights under the new rules,” Daniel says.

Turk urged businesses to execute proper security agreements and register their interests on the PPS register if they supplied goods or equipment on credit subject to retention of title clauses, or otherwise allowed someone else to have physical possession of goods owned by the business.

“In addition, where another person has a right to deal with property in which you have an interest, you should insist they protect themselves and you in turn, by registering effective security interests. Licensing situations are a classic example of where there are hidden risks. If you license intellectual property such as software to someone, and the arrangement allows them to sublicense to a third party, you should insist and check that your contracting party is registered also or you may lose the intellectual property if the third party goes into administration or becomes insolvent.

“These are very complex rules and the devil will inevitably lie in the detail. With the start date now upon us, businesses need to make sure they are prepared and are in the best possible position to maintain ownership of their assets,” Daniel says.

The PPS Act was originally slated to commence in May 2011, then delayed to October 2011 but was subsequently postponed to February 2012 to allow the government to resolve testing of the PPS IT platform. Recent resolution of these technology issues has led to confirmation by the Federal Government of a firm start date of 30 January 2012.