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PPSR could be most valuable tool in a subcontractor's kit

07 March 2019


Because subcontractors fail to register their formwork scaffolding, plant, equipment and various other property on the national Personal Property Securities Register (PPSR), many are not only losing ownership of their property, but also, as a consequence, their businesses.

In warning members of the Australian Subcontractors’ Association of this in a presentation this month, Macks Advisory Principal Peter Macks said he was surprised so many subbies were unaware the PPSR was possibly the most valuable tool in their kit, a key factor in risk management.

He explained why this is so

The PPSR is a provision of the Personal Properties Securities ACT (PPSA).  It’s a national register where subbies can record ownership of an enormous range of personal property -- with the exception of land.

Most importantly the register provides basic ownership protection of subcontractors’ property that may be on a building site, when either the main contractor, or suite owner, is involved in an insolvency matter.

A subbie’s ownership of timber, concrete, tiles, formwork, scaffolding, temporary fencing, pumps, trucks, crush aggregate, roofing, insulation, and more, can all be registered on the PPSR.

If it’s not done promptly the subbie’s ownership of goods on a building site could be lost should, for example, a principal contractor grant a security interest over the site for an extra loan, and then become insolvent.  A liquidator is likely, in these circumstances, to have a higher priority claim to the goods than the subbie

Under the PPSA, ownership of personal property rests with the entity that has a registered interest over it on the PPSR, not the functional owner of the property.

All subcontractors who don’t have personal property in their possession (for example they lease it, hire it, or need to leave it on a building site) should register it on the PPSR immediately it’s out of their possession.  Remember, personal property can, under the Act, be goods that subbies have paid for but not yet delivered to a building site, as well as delivered goods for which they’ve yet to paid

Some additional benefits

The PPSR is not only a mechanism that enables subbies to register security over their own property, but they can also use the register to discover what securities exist over the assets of people with whom they need to deal with daily.

It also enables them, should a head contractor or site owner become insolvent, to determine who is entitled to what, thereby heightening chances they’ll be able to recover their own property.

The PPSA, amended about seven years ago with previously unheard of provisions, is not always readily understood and administered, so that its protective potential can be maximised.

Even when the Act’s provisions are correctly utilised, subbies may still get nothing out of an insolvency matter.

Bottom line: if you’re a subbie and involved, or likely to be involved, in any of the matters referred to here, there’s every chance the PPSR and its creation under the PPSA is something vital to your business.

Ignoring it or using it incorrectly is having catastrophic consequences for increasing numbers of people in the building industry.


Disclaimer: The information contained in this webpage is general information and does not constitute legal advice. Nothing in this webpage is or purports to be advice. If you do need advice, then you ought to seek and obtain appropriate personal professional advice based on your personal circumstance.

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