How proceeds work in relation to PPSR PMSI registrations

A purchase money security interest (PMSI) is a special type of security interest in personal property that is granted to the seller of the property to secure the purchase price. PMSIs are given priority over other security interests in the property, even if those interests were registered earlier on the Personal Property Securities Register (PPSR).

Proceeds are anything that is obtained from the sale, disposal, or destruction of collateral. In the context of PMSIs, proceeds can include

  • money from the sale of the collateral;
  • insurance payouts for the collateral;
  • compensation payments for the collateral; and
  • any other proceeds from the collateral.

When a secured party has a PMSI in collateral, their security interest also extends to the proceeds of that collateral. This means that the secured party has a right to the proceeds, even if they are in the possession of someone else.

For example, if you sell a car to someone on a retention of title basis, you have a PMSI in the car. If the buyer defaults on their payments and sells the car to someone else, you still have a right to the proceeds of the sale. You can enforce your security interest by taking possession of the proceeds from the buyer.

It is important to note that a secured party’s right to proceeds is not automatic. The secured party must have a valid PMSI registered on the PPSR. If the secured party does not have a valid PMSI registration, they may lose their priority to other secured parties or even unsecured creditors.

Here are some tips for protecting your rights to proceeds in a PMSI transaction:

  • Make sure that you have a valid PMSI contract in place with the grantor. The contract should clearly state that you have a security interest in the collateral and its proceeds.
  • Register your PMSI on the PPSR in accordance with the legislative timelines. This will give you priority over other security interests in the collateral.
  • Keep track of the whereabouts of the collateral. If the grantor sells or disposes of the collateral, you need to be able to track down the proceeds.
  • If the grantor defaults on their payments, you should take steps to enforce your security interest in the proceeds. This may involve taking possession of the proceeds or negotiating a settlement with the grantor.

About the author

Greg Quin is a Partner at HLB Mann Judd Insolvency WA and has been with the team for 14 years. Greg oversees the daily operations of the many insolvency appointments managed by the HLB Insolvency team and looks after the operations of the practice.

If you have any queries about insolvency matters, please feel free to contact Greg on 08 9215 7900, 0402 943 091 or via email to

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