Describing the property in a PPSR registration - collateral type and class

When you make a registration on the PPSR, you need to accurately describe the personal property you claim to have a security interest over.

Doing this correctly helps ensure your registration gives you the protection you need and reduces the risk of your registration not being enforceable.

There are two different collateral types, commercial property and consumer property.

Consumer property

Consumer property is generally any property held by an individual that isn't used for commercial purposes. This means it's not being used to carry on a business under an ABN.

Most commonly, property that falls within the the consumer property collateral type are privately owned vehicles such as cars, motorbikes, caravans and boats.

Some registrations that use consumer collateral type have restrictions on the length of registration and whether or not a grantor can be included.

Commercial property

If the property doesn't meet the description of consumer property, then it's likely commercial property.

Once you’ve chosen your collateral type, you’ll need to select a collateral class.

There are many different collateral classes. The most common classes within these categories are:

1. Motor vehicle - this includes things like cars, trucks, caravans, trailers, tractors and diggers. There are rules around whether or not you also need to (or want to) include the vehicle's serial number - that is their VIN, chassis or manufacturer's number (see below).
2. All present and after acquired property (All-PAAP) with and without exceptions - this generally describes all of the current and future personal property of a grantor. It is similar to the pre-PPSR security known as a fixed and floating charge. An All-PAAP is often granted by businesses to their main financier under a general security deed.
3. Other goods - usually this is chosen when you have an interest in specific goods that don't fall into any other of the classes of tangible property (i.e. that are not agriculture, aircraft, motor vehicles or watercraft). It includes things like machinery, printers, coffee machines, jewellery or artwork.

Types of collateral classes

Collateral classes are grouped into four broad categories:

• Tangible property - describes property that you can see or feel.
• General property - the all present and after acquired property (All PAAP) classes.
• Intangible property - describes property that you cant see and feel but is not financial property (such as intellectual property and certain debts).
• Financial property - includes financial instruments and documents, like cash and shares.

Tangible property

The tangible category contains collateral classes that describe property you can see and feel. It contains the following collateral classes:

Motor vehicle

This class includes a broad range of serial numbered moving vehicles including those described above. Motor vehicle serial numbers include VIN, chassis and manufacturer's numbers. Depending on whether you choose the commercial or consumer collateral type you may have to include the serial number when making a registration:

• Consumer property – you must include the serial number.
• Commercial property – you don’t need to include the vehicle's serial number in the registration (some serial numbers such as chassis numbers refer to multiple vehicles), but you may want to. If you don't, there is a risk you will lose your interest if your customer sells the vehicle.

For more information, see enforcing your security interest.

Watercraft

This class generally describes a boat or vessel that is used to travel on water. They have a special identifier which is either called a HIN (Hull Identification Number) or an Official Number. Examples of watercraft include:

• fishing boats, jet skis and tinnies
• yachts, hovercraft and catamarans
• ships, barges and ferries
• house boats and tugs.

Note: seaplanes and outboard motors are not watercraft.

The collateral type you choose will indicate whether or not you have to include the serial number when making a registration:

• Consumer property – you must include the serial number.
• Commercial property – you don’t need to include the watercraft's serial number in the registration, but you may want to. If you don't, there is a risk you will lose your interest if your customer sells the watercraft. For more information, read about enforcing your security interest.

Aircraft

The aircraft class generally describes flying vehicles such as planes and helicopters. They don't have to have an engine to be considered aircraft.

You may also have to register your interest under the Cape Town Convention, meaning you’ll have two registrations – one on the PPSR and one on the International Registry of Mobile Assets. For more information, see International Registry of Mobile Assets.

Aircraft are registered under four sub-classes:

• Aircraft engine
• Airframe
• Helicopter
• Small aircraft (for example, a hot air balloon or two seater plane).

Agriculture

The agriculture class includes personal property that is crops or livestock. You can choose to register your interest as agriculture to cover both of these or you can choose one of the two sub-classes:

• Crops - these are generally crops such as wheat and fruit that have not been harvested yet (once harvested, they are likely classed as 'other goods').
• Livestock - this includes:
  • animals such as goats, fish, sheep and alpacas
  • their unborn young and
  • their products whilst they are still part of them (such as wool).

Other goods

The other goods category includes any tangible property that is not a motor vehicle, watercraft, aircraft or agricultural property.

You can give a more detailed description of exactly what property you are registering over using the free text field.

General property

General property is a category that is used to describe all or most of the current or future property of an organisation. Before the PPSR, these were commonly known as 'fixed and floating charges'. Property in this category is either described as:

• All present and after acquired property (All-PAAP) no exceptions - this is used to describe all of the present and future property of the grantor.
• All present and after acquired property (All-PAAP) with exceptions - this is used when you have an interest over most of the current and future property of the grantor but there are some exceptions.

Note: You must describe the property excluded from an All-PAAP with exceptions registration using the free text field. For example, 'All present and after acquired property of the grantor excluding their rare coin collection'.

Intangible property

Intangible property is personal property that doesn’t have physical form. This category of property includes the following classes:

Account

The account class covers property that takes the form of an obligation to pay. That could come about from:

• property being sold, leased or disposed of
• a right being granted or
• services provided by a business.

An example of this this kind of collateral is book debts - that is, a series of debts owed by customers to a business or individual for goods and services already provided. Another example is credit card receivables which is a business’s history of credit card sales.

Intellectual property

Intellectual property refers to the property that is contained in ideas, knowledge and designs. You can register your collateral as intellectual property or one of the following classes:

• copyright
• design
• patent
• plant breeder’s right
• trade mark
• circuit layout.

The collateral type you choose will indicate whether or not you have to include the serial number of the collateral when making a registration:

• Consumer property – you must include the serial number.
• Commercial property – you don’t need to include the intellectual property's serial number in the registration, but you may want to. If you don't, there is a risk you will lose your interest. For more information, read about enforcing your security interest.

The serial number is usually the number that IP Australia issued for the property. If your serial number changes or a replacement number is issued, you may want to ensure you have a registration including this serial number. You won’t need a serial number if you are registering copyright or a circuit layout collateral.

General intangible

Covers all intangible property that doesn’t fall into the account or intellectual property classes.

Some examples are:

• contractual rights
• authorised deposit-taking institution accounts.

Financial property

Financial property is used to describe monetary property. It includes the following classes:

Investment instrument

The investment instrument class is used to describe financial products. It can be one instrument or a combination and includes things like:

• shares, bonds, stocks and debentures
• derivatives and foreign exchange contracts that are not derivatives
• interests in (or a unit in an interest in) an investment instrument, managed investment scheme or a share in a body
• a financial product traded on the financial market.

It does not include anything that would sit in the other financial property classes described below.

For a full understanding of what forms part of this collateral class, see investment instrument.

Negotiable instrument

A negotiable instrument is a document that guarantees the payment of a specific amount of money. It includes things like:

• contracts which include promises to pay money without condition
• bills of exchange
• promissory notes
• letters of credit.

Intermediated security

Intermediated security describes the rights of a person that an intermediary holds on their behalf in a securities account.

An example of an intermediated security is a share settlement system such as Clearing House Electronic Subregister System (CHESS).

Currency

Currency includes money, cash other other currency that is authorised to be used in Australia or any other country.

Chattel paper

Chattel paper is an electronic or paper document that is evidence of a monetary obligation and a security interest in, or lease of, specific goods. For example, if your business is a car dealership that offers hire-purchase, the hire-purchase agreement document is a chattel paper and you may use it as a type of collateral.

Examples are:

• hire-purchase agreements
• rental agreements
• conditional sales agreements (where security interest is granted in the agreement itself).

Document of title

This class describes a document issued by or addressed to a bailee that covers goods in the bailee's possession and states that the goods identified will be delivered to a person specified or to the bearer.

Some classes give you the chance to offer more information about the collateral you’re registering. This allows you to precisely describe the property you are registering over, limiting the scope of your registration to cover that specific property.

For example, if you select ‘Other goods’, you may want to add information about the property you’re registering. This makes it clear what property is covered and will help anyone searching for security interests over particular personal property understand what your interest covers.

In most cases you don’t have to fill out the free text field – it’s optional. However, for the ‘All present and after acquired property – with exceptions’ class, you must describe the exceptions.

Important note: Do not enter any personal identifiers in the description, such as tax file numbers (TFNs), individual healthcare identifier (IHI), Medicare numbers, birth certificate or passport details. The PPSR is a public register and placing these identifiers in registrations may expose you to the risk of identity theft or even legal action. Registrations containing these identifiers will be restricted and/or removed.