09 November 2018
Personal Property Securities Register (PPSR) - Security release
Our client is the purchaser of a small business. He has set up his own company which will be purchasing the business.
Our client will not be taking over the vendor's company. A third party company has lodged a security interest against the company securing goods, oil, stainless steel tanks for the present and after acquired property for five years.
As we understand it, as the purchaser is not taking over the vendor's company there is no need to obtain a release of the PPSR charge. Is that correct? Please advise.
Thank you for the question.
The purchaser should satisfy themselves that any assets that are the subject of the sale are free of the PPSR charge. A vendor warranty to that effect should be included in the contract.
If the PPSR charge affects assets subject of the sale, a release should be sought.
If the PPSR charge is not released, and the vendor defaults under the security agreement, the third party has the right to seize assets that are the subject of the PPSR charge.
Regards
Mentor
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