AUSTRALIA Law and Practice Contributed by: John Schembri and Erin Cartledge, Gilbert + Tobin
this only provides certain limited procedural ben- efits and does not have any effect on the priority of such security interests. Real Property Most Australian land is registered under a sys- tem known as the Torrens system. Each state and territory operates its own Torrens system for land located in its jurisdiction, and records details of the land and any registered interests in that land, such as mortgages, via a central- ised registry. The most common form of secu- rity granted over real estate is a registered real property mortgage, which is a separate docu- ment to the all-asset general security agree- ment. While the general security agreement will secure all assets of the grantor, including land, the PPSA excludes interests in land, and this means that a registration on the PPSR in relation to the secured property that is the subject of the general security agreement will not perfect the security interest over land. Financiers, therefore, require a mortgage over land to be registered on the Torrens system, which is done by recording the particulars in the relevant land titles register (in most cases using an online electronic con- veyancing platform). It should be noted that it is common for the agreed security principles to specifically exclude any real property mort- gages being granted, though this will, of course, depend on the nature of the transaction, the val- ue of the real estate in the context of the deal, and the bargaining position of the parties. Movable Assets Security may be granted over tangible mov- able property. As mentioned above, security over tangible movable property that is stock-in- trade ( “inventory” under the PPSA) will usually be a circulating security interest over fluctuat- ing assets, which are referred to as “circulating” assets under the PPSA. A security interest over
collateral that secured the obligations of a gran- tor to pay the purchase price of that particular collateral is “purchase money security interest” under the PPSA, which may, if certain conditions are satisfied, afford the secured party a form of “super priority” over the relevant collateral in pri- ority even to a prior-perfected security interest. 5.2 Form Requirements Security over real property requires a mortgage form to be used and lodged at the relevant land registry. The form must be the one prescribed by the jurisdiction where the land is located (noting that, distinct from the position regarding secu- rity over personal property, security over real property is dealt with on a state-by-state basis). All states and territories have now implemented a standardised “National Mortgage Form” , but each imposes its own requirements on how the form is completed, executed and lodged for reg- istration. There are generally no prescriptive form require- ments for other types of security, though it is common for all asset security to be granted by way of a general security agreement and for security over a single class of asset to be grant- ed by way of a specific security agreement. 5.3 Registration Process A secured party can perfect its security interest in personal property in the following ways: • by effecting a registration on the PPSR in respect of the collateral; • by the secured party having “possession” of the collateral; • by the secured party having “control” of one of the limited classes of collateral; or • by a combination of these ways.
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