Elucidate personal property security legislation

Question

Elucidate personal property security legislation?

Answer 1

PPS legislation was passed to try to reconcile the conflicting security interests in goods. It creates a single registration system for all secured interests, defines the secured parties, gives remedies against the debtor, and defines priorities among various secured parties and third party purchasers or general creditors.

To create a valid security interest, the security interest must attach (both parties must have begun performing the agreement) and be perfected (either the secured party files a financing statement under the PPSA or takes possession of the collateral—the latter method is not common). A financing statement sets out the debtor, the secured party, and the general nature of the security interest.

Competing priority claims to the same asset are resolved by assigning priority to the creditor who first perfects its interest. If registration of a security interest is required (rules vary by province), failure to do so means third parties may acquire interests that prevail over the secured creditor, although their interests may not have priority over other claimants. Purchasers who fail to do a search under the PPSA may find that the seller did not have title to the goods, and the goods may be repossessed by the original owner.