The equipment on a business’s premises may be essential to its value. Before paying for it, a buyer should check who owns it, whether it is financed and what must happen to any security interest at settlement.
A Personal Property Securities Register (PPSR) search helps identify registered security interests affecting personal property. It is one part of the investigation, alongside the asset list, finance documents and the sale contract. The PPSR is not an ownership register. PPSR guidance on protecting business assets
Start with the seller and the asset list
Ask for the legal name and entity details of the seller, then compare them with the contract and documents for the equipment. A trading name on the shopfront is not enough to establish who is selling an asset.
Prepare a schedule of the items included in the purchase. For each substantial item, record its description, location, identifying details and the evidence available about ownership or finance. Separately identify hired equipment and anything supplied by a landlord, franchisor or supplier.
An asset appearing in a sales brochure does not resolve those questions. If ownership is unclear, raise it before agreeing to treat the item as part of the purchase price.
Choose the right searches
The search method depends on the seller and the property. Organisation searches use the relevant entity identifier. Serial-number searches may also be relevant, such as a VIN search for a motor vehicle. Check the official requirements rather than assuming an ABN, ACN and business name are interchangeable. PPSR organisation search guidance
Keep the search certificates with the transaction documents. Record the identifiers used and the search date so that your lawyer can check the scope and decide whether further searches are needed before completion.
Read a registration in the context of the transaction
A search result needs to be compared with the actual assets being bought. Ask your lawyer to identify which registrations require investigation and what supporting documents are needed from the seller or secured party.
Questions to resolve include:
- Does the registration potentially cover an asset included in the sale?
- Is the item owned by the seller, financed, hired or supplied under another arrangement?
- What evidence is needed to establish that the buyer can acquire it on the agreed basis?
- Who will obtain that evidence, and by what date?
Do not assume every registration against a seller must be removed in full. The required outcome depends on the asset, the security arrangements and the contract.
Agree the release process before settlement
Where a release is required, ask for the proposed documents early enough for them to be reviewed. A seller’s statement that finance will be paid out should be checked against the arrangements with the relevant secured party.
The settlement plan should identify the amount and payment process, any conditions attached to the release, the assets covered and responsibility for any registration changes. Your lawyer should confirm what evidence is acceptable under the contract. A promise to deal with the paperwork later may leave an issue unresolved when the purchase money is paid.
These steps are transaction-specific. A payout figure, a release document and an updated register each answer different questions; none should be treated as a substitute for reviewing the whole arrangement.
A clear result does not complete due diligence
The PPSR does not replace checking the lease, licences, equipment condition, accounts or the terms of the business sale. The Australian Government’s business-purchase guidance specifically includes asset debts, leases, supplier arrangements and financial records within due diligence. Buying an existing business
For the wider process, read our Queensland business-purchase due diligence guide.
Questions buyers ask
Can I rely on the seller saying the equipment is paid off?
Ask for documents and searches that support the statement. Your lawyer can then assess whether any release or other evidence is needed for the particular assets.
Can the issue be left until settlement day?
Request the information earlier. Allow time for the seller, financier and advisers to resolve discrepancies and agree the documents before funds are due.
Does a PPSR search prove the equipment works?
No. Arrange a separate inspection if the condition or performance of equipment matters to the purchase.
Discuss the purchase before signing
Ensure Legal assists with business purchases and sales in Queensland. Provide the draft contract, asset schedule, seller details and any finance or PPSR documents already supplied so the relevant issues can be identified before settlement arrangements are finalised.
This article provides general information, not advice on a particular transaction. Search requirements and the treatment of security interests depend on the facts, documents and applicable law.
