Financing statement (PPSA)

A lender or equipment supplier registers a financing statement to put its claim on the public record. British Columbia’s government advises checking for liens registered against personal property before buying it, and a buyer of a business’s assets sees them in a PPSA search: under Ontario’s Act, a financing statement names a debtor and a secured party and describes or classifies the collateral. A registration is a lead to check, not proof of what is owed today.

What the statutes say

Ontario’s Act (s. 45) says a financing statement shall be registered to perfect a security interest by registration. Where the collateral is not consumer goods, it may be registered before or after the debtor signs the security agreement. An error or omission does not, by reason only of that error or omission, invalidate it unless a reasonable person is likely to be misled materially (s. 46(4)). BC’s Act separately provides that registration perfects, subject to its s. 19. The Act of each province or territory is its own, so details differ.

What to check or ask

• Whether the debtor’s name and the collateral description match the business and assets being bought
• Whether the named secured party still holds a security interest; Ontario’s Act (s. 56(2)) lets a person with an interest in the property demand a discharge where the named secured party has not acquired one
• Whether a later change statement amended, assigned or discharged the registration