Taking free of security interests under the PPS Act

The Personal Property Securities Act 2009 (Cth) (PPS Act) sets out the circumstances in which a person purchasing property governed by the PPS Act is able to take the property free of security interests: Pt 2.5 of the PPS Act.

These rules are designed to protect purchasers and facilitate sales of personal property. They are often referred to as the “taking free” provisions or the “taking free” rules. They effectively extinguish the security interest at the time of the transaction, for eg, in the case of a buyer, the buyer has good title to (takes free of) person property with an unperfected security interest without any encumbrances. For this reason, this is also referred to as the “extinguishment provisions” or the “extinguishment rules”.

This guidance note explores some of the key “taking free” rules, including the general rule regarding unperfected security interests (s 43 of the PPS Act) and taking business assets free of security interests (s 46 of the PPS Act, the “in the ordinary course of business” rule).

This guidance note also provide practice tips on selected common scenarios which legal practitioners will find useful.

See Taking free of security interests under the PPS Act.