When you’re buying a business, there’s a lot to think about – negotiating the terms, due diligence, leases, stock, employees, and legal documents. But one of the most critical, and often overlooked, steps is running a quick search of the Personal Property Securities Register (PPSR). It costs about $2 takes less than five minutes, and could save you thousands – or even protect you from buying assets that someone else legally has a claim over.
What is the PPSR?
The PPSR is a national online register where lenders and other parties record their security interests over personal property – like equipment, stock, vehicles, intellectual property, and other movable assets. If a business has borrowed money and offered its equipment or assets as security, the lender will likely have a registered interest on the PPSR. This means that if the business defaults on its loan – or is wound up – the lender can seize those assets even if they’ve been sold to someone else. If you’re the buyer and haven’t picked this up, you might find that the computers, machinery, or vehicles you paid for suddenly don’t belong to you.
What kind of things show up on a PPSR search?
When you run a PPSR search, you’ll see if any security interests have been registered over the business or its assets. These usually fall into two main categories:
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Specific asset registrations – for example, a finance company has a charge over a particular vehicle or piece of machinery.
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All Present and After-Acquired Property (ALLPAAP) registrations – these are broader, and give the secured party an interest over everything the business owns now and in the future (unless specifically excluded). An ALLPAAP registration can be particularly risky, because even assets that are acquired after the registration date (and later sold to you) may still be caught by the security interest unless properly released.
What if the PPSR search shows something?
If your PPSR search reveals existing registrations over assets you’re intending to buy, the best course of action is to require a Letter of Comfort (or release letter) from each secured party before you complete the purchase. This letter is usually short and simple – it confirms that:
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The secured party has been paid out, or is otherwise no longer claiming an interest in the specific assets being sold, and
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They consent to the sale and will not enforce their rights against those assets after settlement.
Ideally, your purchase contract should make this a pre-condition to completion. That way, if the Vendor can’t secure the necessary releases, you’re not forced to complete and inherit the risk.
Why does this matter?
If you complete a business purchase without resolving PPSR interests, you run a very real risk of:
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Losing the asset altogether – if the secured party enforces its rights, you may be required to hand it over
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Paying again – in some cases, the only way to retain the asset is to pay out the debt yourself
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Having no recourse – once the deal is done, it may be difficult or impossible to pursue the Vendor (especially if they go into liquidation or disappear)
Put simply: even if you paid full price, the law may not protect you if someone else had a registered interest and you didn’t do your homework.
So what should you do?
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Always run a PPSR search before buying a business or its assets. It only costs $2 per search and can be done online in minutes.
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Check the results carefully – look for registrations over: specific items (vehicles, equipment, stock); the business ABN or ACN; ALLPAAP or circulating asset clauses
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Insist on a Letter of Comfort or release from each secured party before you complete.
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Include a clause in your contract making the release of PPSR interests a condition of settlement.
Final thoughts
A PPSR search is one of the simplest, cheapest, and most valuable steps you can take when buying a business. If you’re not sure how to interpret the results, or need help negotiating the release of PPSR interests, our team at Magnolia Legal can guide you through it. We work with buyers and sellers of small and medium businesses every day, and we know the traps to watch for. Buying a business should be exciting – not a legal minefield. A $2 search could save you a fortune