How to search the PPSR, and what to do with what you find

A PPSR search shows who already holds a registered security interest over a business, a person or a vehicle. You search online on the Personal Property Securities Register by company name, company number and NZBN, a person’s name, or a vehicle’s plate, VIN or chassis number. Each search costs $2 + GST ($2.30), and you need a genuine business reason, such as deciding whether to give someone credit.

The search itself takes a few minutes. The value is in what you do with the answer: whether you give this customer credit, how much, for how long, and on what security. If you are new to the register, start with the PPSR explained.

How to do a PPSR search

1. Log in to the PPSR with an online services account. A business uses RealMe. If you are searching as an individual, you can also log in with Google or Facebook.
2. Choose the kind of search: a company, a person, a vehicle, or a registration number.
3. Confirm you are searching for a legitimate reason.
4. Enter the details you have.
5. Pay the $2 + GST fee.
6. Save or email the result as a PDF. It also stays in your recent searches for 14 days.

Searching a company

The register recommends two searches: one by the company’s name, and one by its company number and NZBN. Adding extra details narrows a search, and a narrow search can miss a registration. The search ignores words like “limited” and “ltd”, and punctuation, so small differences in how the name is typed will not throw it.

Searching a person

For a sole trader or an individual, first and last name are the minimum. A date of birth or address narrows the search, so only add them if you are sure they are right.

Searching a vehicle or machine

Enter every number you have: plate, VIN and chassis number. The search returns anything that matches any one of them, so more numbers give you a wider net. The VIN is the most reliable, because a plate can change. If you are holding a vehicle because work has been done and the invoice has not been paid, do not assume you are the only party with an interest in it. It may be under finance, a lease, or another registered security interest.

Searching a registration number

Every registration has its own number. Searching by it finds that one registration, including one that has expired or been discharged, which a name or vehicle search will not show. It is also the simplest way to check your own registrations are still current. Registrations last up to five years, with no reminder.

First, make sure you are searching the right business

A search is only as good as the name you put into it, and that starts with knowing exactly which legal entity you are dealing with. The Companies Register is free to search. It confirms the company exists, shows its company number and NZBN, names the directors, and shows whether it is in receivership or liquidation. Your terms of trade, your credit application and your invoices should all carry that same legal name.

We worked with a business owner whose customer had been paying reliably for around nine years, spending thirty or forty thousand dollars a month. Then the customer walked in, and instead of paying his bill, told him the company was going into liquidation. When we went back to the signed credit application, the legal entity on it did not exist. Our client had inherited that customer when he bought the business, and nobody had ever checked the name against the Companies Register. It is the sort of tiny administrative detail that can feel completely irrelevant when somebody has been paying you perfectly for nine years. Right up until the moment that it isn’t irrelevant anymore.

Your agreements only protect you if they are held with the correct legal entity. It is a small step, and it can make a big difference to who you are really extending credit to.

Reading what comes back

If nothing is registered against the details you entered, the register tells you so on screen. Before you take comfort from that, check you searched the right legal name and number.

If something is registered, you get a list of financing statements. Each one is a registration. It tells you who registered it (the secured party), who it is against, what it covers, and when it was registered. Look closely at what it covers. A registration described as “all present and after acquired personal property” is security over everything the business owns now and everything it gets later. That is the kind a bank or finance company usually takes.

Two things a result does not tell you:

• The order in the queue. A search shows who has registered. Who ranks first depends on when each party registered, and whether any of them registered security over goods they supplied in time to jump the queue.
• Tomorrow. A result is accurate at the date and time you searched. Registrations can be added the next day.

And the PPSR covers personal property only. Land and buildings sit with Land Information New Zealand.

When someone is already there

So the search shows a bank, a finance company or another supplier already registered against your customer. What should you do? That is your decision to make, and it is a strategic one. The right answer depends on the size of the work, the customer, and how much you are prepared to carry.

What helps is understanding the queue. A bank with security over everything the business owns will usually be claiming more than the value of any goods you supply. Even so, being registered puts you in the queue, and if the bank’s security comes off, you move up. It is a principle as much as a function: it decides how you sit in the eyes of a liquidator, and it gives you every opportunity to be in the best possible position.

You can be put ahead of the bank

A supplier can rank ahead of a bank in three ways:

• Register first. Between registered parties, the earlier registration generally ranks first, so security in place before the bank’s stays ahead of it.
• Security over the goods you supply, registered in time. This ranks ahead of the bank’s earlier general security in those goods, without the bank agreeing. The timing rule.
• The bank agrees. A secured party can agree to put its security behind yours, in a priority agreement.

A general security agreement signed after the bank has registered does not move ahead of the bank on its own. It still puts you in the queue, behind the bank and ahead of everyone unsecured.

One of our clients, a specialist contractor, was offered a large subcontract. The director of the company offering the work agreed to sign a general security agreement, then started backpedalling. He realised it could place our client in a stronger security position than his bank, which could affect his future lending. That hesitation was real and understandable. Our advice to our client was that it was right to hold the highest level of security, because of the nature and value of the work and what was at stake, and that the security could be partly released if a genuine financing need came up. Several months later, the caution applied at the outset proved absolutely justified.

The point is what is fair and reasonable. If you are putting half a million or a million dollars of labour, materials and resources into someone else’s project, a high level of security against that business is a fair ask. On a small job for a long-standing customer, it may be more than the situation needs. There is no blanket answer. It is about reducing your risk in proportion to what you have at stake.

Talk to us about your security

What sits within your control

Security is one way to reduce your risk, and it sits alongside others. The best position of all is to provide less credit, for less time. As we tell clients, the only thing that guarantees you get paid is not providing credit at all. So before you lean on security, look at how the job is structured: breaking it into smaller stages, taking deposits and progress payments, and getting paid faster.

Then make the search a habit at the moments that matter:

• when you take on a new customer;
• when a customer asks for more credit, or a much bigger job;
• when you buy a business and inherit its customers, who may need re-papering in the right legal name;
• before you rely on a vehicle or machine you are holding;
• and on your own registrations, so none expires unnoticed.

For the wider picture of checking a customer, from the Companies Register to credit reports, see checking a customer before you give them credit.

This page is education and commercial insight from our own research and experience, not legal advice. Do your own research, and get legal advice for your own situation.