Personal Property Security Act (Canada)
The Personal Property Security Act is the name given to each of the statutes passed by all common law provinces, as well as the territories, of Canada. They regulate the creation and registration of security interests in all personal property within their respective jurisdictions.
It is similar in structure to Article 9 of the Uniform Commercial Code in the United States, but there are important differences.
PPSA regime
The legislation that implemented the PPSA scheme was first introduced in Ontario, followed by the remaining provinces and territories. The Atlantic provinces, together with the Northwest Territories and Nunavut, have fully computerized registries, while the others have varying degrees of electronic and paper registration. The following is a brief outline of how the regime generally works.Personal property subject to the Act
The scope of the Act is extremely broad, as it is concerned with every transaction which in substance creates a security interest, without regard to its form and without regard to the person who has title to the collateral. There are small differences between the provinces as to how far this extends, but the concept is basically the same. That said, however, there are some items that are specifically excluded:Personal property is classified into the following categories:
Creation of security interests
Security interests are created through attachment, which can be followed on by perfection.Attachment occurs when
Perfection can occur by possession of the collateral, or by registration. In certain circumstances, possession can be considered to be the superior form of perfection.
Purchase money security interests (PMSIs)
A PMSI is a special type of security interest taken in collateral by a party who gives value for the purpose of enabling the debtor to acquire rights in the collateral. Some examples are:| Type of interest | Collateral |
| Loan to purchase goods | The goods |
| Sale of goods | The goods |
| Leases | The leased asset |
| Consignment of goods | The goods |
Creation of "super-priorities"
In specified circumstances, PPSA registrants can obtain "super-priority" status over other secured parties, when the following steps are taken:| Collateral | Steps to take |
| Inventory | Perfection at the time of possession, provided that notice has been given to other secured parties before registration |
| Intangibles | Perfection no later than the specified number of days after attachment |
| Other than the above | Perfection no later than the specified number of days after possession by the debtor |
The PPSA and land
PPSA security interests can have priority over real property security interests against fixtures, when the secured party registers notice against the land at the local registry or land titles office. Where attachment occurs before the affixation to the land, the interest will have priority, However, where attachment occurs after affixation, the interest is subordinate unless where the debtor otherwise consents.Other intersections can also occur with interests in land. For example, a lender that grants a mortgage over a rental property will also register a PPSA security interest against the rents being generated, in order to attorn the rents in the event the mortgage goes into default.
Priorities of security interests
In the absence of any other special priority rules, the general order of priority is as follows:| Event | Priority given |
| Competing interests are perfected by registration | First interest to register |
| Competing interests are perfected other than by registration | First interest to perfect |
| One interest is perfected by registration, and the other interest other than by registration | Registered interest takes priority if registered and perfected before the other is perfected. Interest perfected other than by registration takes priority if it is perfected prior to the registration of the other interest. |
| Competing interests are both unperfected | First interest to attach |
| One interest is perfected, and the other is unperfected | Perfected interest |
Regime under Québec legislation
For moveable property in Québec, secured creditors create their security interests by way of hypothec through the Registre des droits personnels et réels mobiliers.Security interests created under Federal legislation
Federal legislation has also created certain security interests that may take precedence over provincial legislation. They notably include:Conflicts between provincial PPSAs and federal legislation
S. 89 of the Indian Act governs the application of security interests on reserves:Recent jurisprudence has tended to restrict how this provision should be applied.
There can also be complex interplay with security interests under admiralty law.
Resources by province
Notable cases
- Bank of Montreal v. Innovation Credit Union
Documents
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