We continue to see an increase in requests for services involving our neighbors to the North. Of those requests, Personal Property and Security Act (PPSA) registrations are topping the list. The PPSA is commonly thought of as the Canadian version of the Uniform Commercial Code (UCC) filings by many in the industry. Dealing with International Services as often as we do in today’s market, we know this to hold a lot of truth in terms of how they are understood, but have also found them to be very misunderstood.
The PPSAs of Canada are similar to UCCs in the United States in many ways. In fact, the origin of the PPSA is based on the 1967 United States Article 9 model (since revised in 2001 and again in 2010).
At its core, a PPSA Registration is very similar in that it is made by a creditor against a debtor registering a lien. Both a PPSA and a UCC are created with the intent to perfect and maintain a lender’s security interests and impact a lender’s position for repayment and/or collection should the debtor default. Like a UCC, a PPSA is on moveable property and it is not a filing in the Land Registry.
Many of the required fields on a PPSA registration and a UCC filing are the same as well. To register a PPSA, you need four pieces of information:
- Duration of Time: The number of years the PPSA must exist for
- Debtor: The person receiving the money
- Secured Party: The lender, financier, or lessor
- Collateral Description: A description of the collateral related to the PPSA
Note: you do not need a signature, but it’s good to maintain the signed security agreement
Comparable to the U.S. where each state can incorporate variations of UCC Article 9, each province may have different regulations that pertain to PPSA registrations. Quebec is the only province that has not adopted the PPSA, they use the Civil Code of Quebec when it comes to security transactions. This all makes it that much more confusing for most filers, and yet even the word “filing” is different… Did you notice above I used the language “registration” when talking about PPSAs instead? That specific wording is just one small difference of numerous differences that can trip people up regarding these two often confused services.
There are other key differences between UCCs and PPSAs for us to touch on that go beyond simply what country they are in and the proper vernacular.
Unlike in the U.S., the filing office for PPSAs is determined by the location and the type of collateral. PPSAs are filed at the province or territory accordingly if the collateral consists of tangible goods. The only exception to that general rule involves collateral that is considered to be intangible personal property. In those instances the debtor’s location does determine the registration jurisdiction as shown below:
Additional identifying information is required for individual debtors with PPSAs. Also, there are some different time periods for PPSA registrations, lapse of registrations, etc. that are critical for us to be aware of. The registration periods depend on the length of security interests and can even be permanent ineffectiveness in certain situations. The secured party that chooses to register decides on the duration of the PPSA based on terms agreed to by the debtor. Fees actually correspond to the length of registrations for that reason with some lien periods being less expensive for as short as one year and the longest-lasting being the most costly.
In the U.S. it is widely known by lenders that UCCs are good for five years in most states. If they are to be effective for an additional five years, they need to have a continuation filed. There is a window to continue that opens six months prior to when the UCC lapses and this is the only time it can be continued. Not so with PPSAs where there is no specific window of time to renew or extend the financing statement. The secured party can choose to renew an original registration for any period in whole years as long as that renewal is made before the original expires.
Our service team knows the necessary nuances to comply with and to get you a successful result. If you’re looking to file a PPSA you can send the request and form to firstname.lastname@example.org. We are ready and waiting to secure your interests no matter the jurisdiction.