Farmers across Australia will be able to check before buying second hand machinery if it is being used to secure a loan following the announcement by the Federal Government that it will establish a new national register for personal property securities.
David Aitken, head of Slater and Gordon’s Regional and Rural Practice, said the register would let farmers and others check that any second hand machinery, tools, vehicles and other equipment they are interested in buying isn’t being used as collateral to secure a loan.
“This is a concern for many farmers who buy second hand machinery and then find it isn’t fully owned by the vendor because it has been used to get a loan from a bank,” Mr Aitken said.
“As part of the new register, farm machinery and other property will be listed so farmers can check to see if it is encumbered in much the same as purchasers buying a used car are currently able to do,” he said.
Mr Aitken congratulated the new Federal Attorney-General, Nicola Roxon, on the initiative saying it will go a long way to protecting farmers against having the machinery repossessed by a bank or some other lender who was owed money by the previous owner.
“It will also cut the time and cost needed to search across the many current state and territory registers to ensure money isn’t owed on the machinery or that it isn’t being used to secure a loan.”
The new register will be open from 30 January 2012 and will replace more than 70 different Commonwealth, state and territory Acts and registers used to regulate personal property used as security. The register will not include real-estate.
A personal property security interest occurs when a person or company takes an interest in personal property as security for a loan.
For example, a bank or money lender will hold a security interest over a tractor while it is being paid off by the purchaser.
The tractor itself is security for the loan, so if the purchaser defaults on the loan, the lender may repossess the tractor to recover the loan amount and any associated costs.