Term
| What is the purpose of the PPSA? |
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Definition
| PPSAs are statutes passed by all provinces and territories of Canada, and they regulate the creation and registration of security interests in all personal property within their jurisdiction. The PPR is the registry, while the PPSA is the Act. |
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Term
| Which provinces/territories have PPSAs? |
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Definition
| All provinces and territories in Canada have their own version of the PPSA, with Ontarios being the most different. |
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Term
| What do security interests do? |
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Definition
| Security interests allow the secured party the right to seize, sell, or otherwise access value of the collateral upon the debtors default, the right to apply the proceeds in preference to the secured parties (lays out priority), and gives secured parties the right to enforce their security interests against unsecured 3rd parties. |
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Term
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Definition
| The PPSA exists to register and clearly layout the security interests held by certain parties in collateral, and to make the secured interest publicly available knowledge to those who may be affected. Some mortgages look fraudulent, such as shadow mortgages and floating charges, and are more easily handled when registered. |
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Term
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Definition
| Covered by PPSA, section 3. Covers any form of security with few exceptions. Does not cover land. Very flexible; doesn't matter how parties define a transaction but depends more so on the intention of the parties, and most transactions are usually covered. Only covers animals after conceived, crops after they begin to grow (put into the ground), minerals after extracted, and trees other than crops until they are severed. |
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Term
| When is a security interest created? |
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Definition
- Transaction creates or evidences a proprietary interest in an asset in favor of a creditor.
- Asset is personal property, not land.
- Creditors proprietary interest functions to secure payment/performance of an obligation.
- Interest arises out of agreement between parties; needs to be consentual.
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Term
| What are the steps in the creation of a security interest? |
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Definition
- Agreement: Contract, but not a claim.
- Attachment: Creditor is given a claim.
- Perfection: Once the creditor registers their security interest(s) they are given priority with distribution of assets.
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Term
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Definition
Liens are not consentual agreements. They override perfected security interests and are given priority.
**Must remember that security interests need to be consentual** |
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Term
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Definition
Interests in land are beyond the scope of the PPSA and they take priority over perfected security interests, even when those interests are properly registered.
Remember case where there was essentially a "mortgage-of-a-mortgage" as security. Even this link to land was considered beyond the PPSA and was given priority. |
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Term
| Are licenses considered property under the PPSA? |
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Definition
| There is some flexibility with licenses, and depending on their substance they can sometimes be considered personal property. Licenses aren't themselves considered property, but they may represent rights to property or to a stream of income, and thus may be considered rights in those properties. |
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