Personal Property Security

In the commercial context, “security” is an interest in property given by a debtor (borrower) to a creditor (lender) – in support of a promise to pay. The phrase “secured transaction” refers to transactions where the debtor has provided the creditor with security of some sort.

You may be familiar with how mortgages work in the real estate context. Most commonly, a borrower will grant a mortgage on his house in favour of a lender. The house is the security and the mortgage will appear as a charge against the house on its certificate of title. If the borrower defaults, the lender can go after the house itself. The lender in this scenario is thus “secured”.

What many people do not know is that personal property can also be held as security for any obligation. For example, if I borrow money from a friend, I could offer her my computer as security for my promise to pay her back. She would have a “security interest” in my computer.

A secured creditor can register its security interest in the Personal Property Registry – a notice registry for registration of all charges against personal property (with certain exceptions). The Personal Property Security Act, RSBC 1996, c 359 (the “PPSA”), governs this regime.

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