Free from any Security, Charge or Encumbrance
The ACL at Section 53 guarantees that goods are free from any security, charge or encumbrance.
This section of the Act is generally referring to where someone has registered an interest over an item on the Personal Property Security Register (PPSR).
The PPSR is a register, maintained by the Federal Government, where an interest over property can be entered.
For example, if you take out a car-loan the lender is likely to register its interest over the car.
If you sell the car the lender may be able to reclaim it and sell it again to pay-off the loan.
However, under the ACL a consumer who buys an item only to later find out someone else has registered an interest over it, will be able to take legal action against the seller.
So, in the example of a used car the buyer may lose the vehicle to the lender but they are able to take legal action against the seller under the ACL.
Obviously, this is a less than ideal scenario and it is always wise to undertake a PPSR check before making a major purchase – or seek legal advice.
Page last updated 15/12/2020