The Act provides for the treatment of existing security interests, called transitional security interests.
A transitional security interest is an interest that arises before or after 30 January 2012 (registration commencement time), where the security agreement is entered into prior to that time, and the Act would have applied.
Migrated security interests are interests that are currently registered on transitional registers. Once ‘migrated’, these interests are deemed to have a registration time immediately before the registration commencement time.
A non-migrated security interest is any transitional security interest which is not a migrated security interest, IE an interest not located on any register.
A transitional security interest will be declared to be perfected from immediately before 30 January 2012 for the period of 24 months after 30 January 2012 or until it is perfected by other means (registration).
Therefore the ‘priority time’ for all transitional security interests, provided they are continuously perfected, is the same – immediately before 30 January 2012. However, interests that could have been registered on an existing register (migrated security interests) but which were not, will not gain temporary perfection.
The table in section 320 applies the Act’s general priority rules to transitional security interests as follows:
Has priority over
|Perfected transitional security interest||Unperfected security interest (include transitional)||General priority rule – perfected over non perfected||55(3)|
|Perfected transitional security interest||A perfected security interest registered at or after 30 January 2012||First in time rule – TSI is perfected from immediately before 30 January 2012 by s 322||55(5) and 322|
|Unperfected transitional security interest||Unperfected security interest (not transitional)||Order of attachment||55(2)|
|Perfected security interest (whether transitional or not)||Unperfected transitional security interest||Perfected over non perfected||55(3)|
Because transitional security interests are deemed to attach to collateral and are perfected since immediately before 30 January 2012, the priority time cannot be determined. Hence pre-existing law will be applied to determine priority.