PPSA stands for the Personal Property Securities Act. The PPSA regulates and enforces security, and provides the mechanism to manage the priority of competing for security interests.
The PPSA is designed to protect both creditors and debtors through the establishment of a provincewide notice-based registration system – the Personal Property Security Registry (PPSR) – and by regularizing secured transactions in personal property.
Although PPSA rules, regulations and registration requirements differ from province to province, there are four universal concepts to keep in mind:
Consensual Security
The PPSA only covers consensual security. This means that the debtor must grant the creditor an interest in the collateral.
Registration
When there are a number of secured creditors for the same property, the first creditor to register notice of a security interest in the debtor’s property generally gets first priority security interest in that property.
Attachment
A security interest cannot be enforced against a third party unless it is attached. Attachment occurs when value is given, the debtor has rights in the collateral, and the debtor has signed a security agreement as defined by the PPSA.
Perfection
Secured parties can perfect their security interest through registration, possession, and control. If a debtor has assets/operations in various Canadian provinces, the secured creditor should register its security interest in each province in order to perfect.
The PPSA system in Ontario
Ontario has a central registry for all securities registered under the Ontario PPSA. A search of the registry will reveal the debtor’s encumbered assets and can be searched using four criteria:
- By the individual’s surname, first name, middle initial, and birthdate
- By the individual’s surname and first name only
- By the business name
- By a motor vehicle identification number (the VIN)
Ontario’s PPSA requires all financing statements and financing change statements to be registered electronically. The system can be complex, but here are a few key points to remember:
- Only one financing statement is required to be registered in order to perfect multiple security interests, and the financing statement is only valid for the period of the registration.
- If a financing statement is registered by a creditor who has no security agreement allowing for the registration the debtor can demand that the creditor remove the registration.
- If the debtor relocates to a new province/jurisdiction, the secured creditor has 60 days to register its security interest in the new jurisdiction or 15 days on notice being given to the secured creditor that the debtor will be relocating.
- If the debtor is located outside Canada, the secured creditor must follow the laws of the foreign jurisdiction in enforcing its security interest.
Whether you are a debtor or a creditor, it can be difficult to understand and navigate the legal ins and outs of the PPSA. The team at Dana MacRae Licensed Insolvency Trustee can help. We have years of experience in different types of services, including bankruptcy, insolvency and debt counselling in Waterloo and other Ontario areas.
Dana MacRae Licensed Insolvency Trustee has been helping people manage their debt since 2000. With 10 offices across Southwestern Ontario, it’s easy to schedule an appointment. Just go to www.danatrustee.ca and book your appointment online. We offer video conferencing, or book a home consultation and have the trustee come to you (when allowed by COVID-19 protocols). Contact us today at 1.800.665.9965 or info@danatrustee.ca to learn more about our services and find the financial solution that’s right for you.