Personal property

How BC law treats it

Property is either real property (land and things attached to it) or personal property. Personal property includes tangible goods, such as equipment, inventory and vehicles, and intangibles, such as shares, receivables, contract rights, cryptocurrency and intellectual property. Ownership and transfer of personal property are governed by contract, the Sale of Goods Act, RSBC 1996, c 410 for sales of goods, and other specific laws such as securities transfer and intellectual property statutes. The Personal Property Security Act, RSBC 1996, c 359 (PPSA) governs only security interests in personal property. A security interest attaches when the debtor signs a security agreement, value is given and the debtor has rights in the collateral. The lender perfects it, usually by registering a financing statement in the Personal Property Registry, and priority between competing secured creditors generally depends on the order of registration or perfection. A purchase-money security interest can take priority over an earlier general security agreement if it is registered within the required time. Goods can become fixtures by being attached to land, which brings special priority rules under the PPSA and the Land Title Act. Buyers of goods sold in the ordinary course of the seller's business generally take free of the seller's lender's security interest, unless the buyer knows the sale breaches the security agreement (PPSA s. 30(2)).

What it means for your business

Most of a BC business's assets are personal property, so they are what lenders take as security and what buyers acquire in an asset purchase. Before buying equipment, a vehicle or a business, a Personal Property Registry search shows whether a lender already has a claim. Suppliers who sell on credit or lease equipment can protect themselves by registering their interest. Unregistered security interests can be lost to a trustee in bankruptcy. Example: Before buying a used excavator from a Prince George contractor, a buyer searches the Personal Property Registry by serial number and finds a lender's registration. The buyer requires the lender's discharge as a condition of paying.

Risks and common mistakes

Buying used equipment or a business without searching the Personal Property Registry. Registering a financing statement with the debtor's name or serial number wrong, making it ineffective. Assuming a supplier who sold on credit has priority without a registered security interest. Missing the deadline for registering a purchase-money security interest. Treating the PPSA as the law governing ownership of all personal property.