Selling Agricultural Goods And Registering A Personal Property Security Interest
It is common for a farmer to sell produce on terms that payment shall occur at a later date. A risk which arises is the possibility of the buyer entering into liquidation prior to paying. Where a buyer becomes bankrupt or is liquidated, then secured persons, such as a bank with a registered mortgage will always be entitled to receive payment from a liquidator prior to unsecured creditors.
It is possible however for a farmer who has sold produce on terms for payment in the future, to become a secured creditor by utilising the Personal Property Security Interests Act 2009 (PPSA).
How you effectively register a security interest:
1. Complete a written agreement with the buyer that grants you the right to retain title in your produce until you receive payment, AND a right to register a security interest on the Personal Property Securities Register. On the agreement you need:
• The full and correct legal name of the buyer (ie whether they are a company, trust, partnership or an individual);
• The buyer’s ABN (where they have one); and
• The date of birth of the buyer if the buyer is an individual or a partnership of individuals.
2. You then need to ensure that the written agreement is completed and signed prior to delivering your goods to the buyer.
3. Then register your interest electronically on the Personal Property Securities Register at https://www.ppsr.gov.au/ before delivering your goods.
Geoff Yeo from Peacockes can assist you protect your interests by preparing an effective agreement and with registration. Call on 0448 673 924 if you need this or any other legal assistance.