Categories of Personal Property

Personal property is broadly defined to include all property other than interests in real property. However, not all items of personal property are included.

It is also important to identify the category of collateral because it will influence:

  • the description of the collateral in the security agreement (the document which evidences creation of the security interest);
  • the prescribed ‘class of collateral’ to be specified in the Financing Statement registering the security; and
  • the steps taken to perfect the security interest in the collateral.

Exclusions – Section 8(1)

In summary, the following are excluded from the operation of the PPSA:

  • fixtures – the general law will continue to apply;
  • the interests of a seller who has shipped goods to a buyer under a negotiable bill of lading;
  • a lien or charge that is created , arises or is provided for under a law of the Commonwealth, State or Territory;
  • a lien, charge or other interest in personal proeprty that arises by operation of the general law;
  • any right of set off or right of combination of accounts;
  • an interest provided for by the creation or transfer of an interest in land;
  • an interest provided for by a transfer of an account made solely to facilitate the collection of the account on behalf of the person making the transfer or a transfer of an account where the transferee’s sole purpose in acquiring the account is to collect it.
  • a sale of an account or chattel paper as part of a sale of business, unless the seller remains in apparent control (within the ordinary meaning of that term) of the business after the sale;
  • water rights generally; and
  • interests prescribed by the Personal Property regulations.

Definitions of personal property

Section 10 defines specific items of personal property. The following are more commonly encountered.

Tangible property

Tangible personal property is defined as ‘goods’. The Act then classifies ‘goods’ into three further categories:

  • Inventory: goods held by an enterprise allocated an ABN for the purpose of consuming in the course of that enterprise or for selling or leasing to customers;
  • Consumer: goods being used or that have been acquired to be used primarily for personal, domestic or household purposes;
  • Non-inventory/equipment: the plant and equipment used to run a business.

Security interests in consumer property are treated very differently under the Act.


Essentially, an Account is a chose in action which records an obligation to pay resulting from a sale of goods or the performance of a service in the ordinary course of business. It is more commonly known as an ‘account receivable’ or ‘book debt’. In the PPSA context, accounts will often be the ‘proceeds’ of inventory.

Financial Property

Financial property is a specific category of personal property, which includes the following:

Chattel paper

Chattel paper is a document that evidences both a monetary obligation (chose in action) and a security interest. Most retention of title arrangements are chattel paper. Much like accounts, chattel paper may also be used as collateral.


Currency is that currency authorised as a medium of exchange by the law of Australia or any other country.

Documents of title

A document of title means a writing that covers goods in a bailee’s possession and which states that the goods identified will be delivered to a certain person. A bill of lading is a document of title.

Investment Instruments

Investment instruments are essentially financial products. This includes shares, debentures, derivatives, assignment options, interests in managed investment schemes.

Negotiable instruments

A negotiable instrument is essentially any writing that evidences a right to payment of currency. It includes a bill of exchange, cheques and promissory notes.

Intangible property

Intangible property means personal property (including a licence) that is not financial property, goods or an intermediated security. The main category of intangible property is intellectual property.

Intellectual property are rights conferred by the following Acts:

  • Designs Act 2003;
  • Patents Act 1990;
  • Trade Marks Act 1995;
  • Plant Breeder’s Rights Act 1994;
  • Circuit Layout Act 1989;
  • Copyright Act 1968; and
  • any other corresponding foreign law right.

 Serial numbered collateral

The following goods are ‘serial numbered goods’:

  • Motor vehicles;
  • Watercraft;
  • Aircraft including airframes, aircraft engines, small aircraft and helicopters; and
  • Intellectual property.

This means that these goods may be registered on the PPS register by their applicable serial number. However, if the above goods are ‘consumer property’ then a registration by serial number is mandatory.

Collateral that may be perfected by Control

It is important to identify the following types of collateral which may be perfected by control and therefore gain priority over securities perfected by registration.

ADI accounts

An ADI account is essentially an account kept with an Authorised Deposit-taking Institution (bank) that is payable on demand or at some future time. ‘ADI’ has the same meaning as in the Banking Act 1959 (Cth)

Intermediated securities

An intermediary is a person who holds an Australian financial services licence permitting the person, in the course of business, to maintain a securities account on behalf of others.

An intermediated security is the rights of a person in whose name an intermediary maintains a securities account.

Investment Instruments

Investment instruments are essentially financial products. This includes:

  • shares;
  • debentures;
  • derivatives;
  • assignment options; and
  • interests in managed investment schemes.

Letters of credit

The Act contains no definition of a ‘letter of credit’. A general definition of a ‘letter of credit’ is an advice issued by a bank authorising the payment of money to a named person on presentation by that person of specified documents to another bank.

Negotiable instruments

A negotiable instrument is essentially any writing that evidences a right to payment of currency. It includes a bill of exchange, cheques and promissory notes.

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