In the mass of data produced in PPSR search results, it can be easy to overlook important clues about priority. In a general sense, the first to register “wins” and the registration start time noted on a search certificate is all important. However, where a registration is linked to an earlier registration number, it is necessary to investigate the relationship between the parties to the registrations and the associated documentation. It may be that the secured party in the later registration is the guarantor of the grantor in the earlier registration, who has paid out the grantor’s debt and is entitled to “step into the shoes” of the lender and have the benefit of the lender’s security (and start time) evidenced by the earlier registration. In those circumstances, a secured party who registers later in time may in fact have priority in the event of the grantor’s insolvency.

Take out lesson:
Take note of the linking of a PPSR registration to an earlier registration number. It may indicate a guarantor’s right of subrogation or entitlement to the benefit of security evidenced by an earlier registration. Any reference in a search certificate to an earlier registration number should be investigated. Priorities may not be what they seem.

For further information, please contact: Nicola Young, B2B Lawyers, +61 3 8602 4000,  nicola.young@b2blaw.com.au

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