Searching liens under the Personal Property Security Act in Alberta

When you buy a business’s equipment, vehicles or inventory in Alberta, a lender may already hold a registered security interest in it. Alberta’s Personal Property Security Act sets up a registry where those interests are recorded, and the province tells buyers to search it before buying personal property. A search is only as good as the name or serial number you enter, and the way the Act and its regulation treat names is what makes Alberta searches different from a casual look-up. This guide covers the search types the Act provides, how to read the result, and the gaps a buyer should still ask the seller about.

What the Act lets you search

Section 48(1) of the Personal Property Security Act allows a person to request a search by debtor name, a search by the serial number of goods prescribed as serial number goods, a search by registration number, a printed search result, and a copy or certified copy of a registered printed financing statement or other document. Alberta.ca sets out the forms: individual debtor name, business debtor name, serial number, registration number, a distribution-seizure search of one or more debtor names, and a certificate of an expired or discharged registration. Searches are submitted at any registry agent office in Alberta, so allow a little time before a closing deadline.

Why the debtor’s name must be exact

Under section 43(7) of the Act, a registration is invalid if a search of the registry using the name, as prescribed, of any of the debtors required to be included in the financing statement does not disclose it as an exact or inexact match. The Personal Property Security Regulation prescribes the names. For a body corporate, section 21 requires the name of the body corporate; for a partnership registered under the Partnership Act, the registered name of the partnership. For an individual, section 20 requires the last name followed by the first name and middle name, if any, and an individual who carries on business under another name must still be given by their own name. A buyer should search the seller’s precise legal name, not the trade name on the sign, and ask the seller for every legal name the business or owner has used.

Serial number goods are searched separately

The regulation defines serial number goods as, apart from a garage keeper’s lien, a motor vehicle, a trailer, a mobile home, a designated manufactured home, an aircraft, a boat or an outboard motor for a boat. Alberta.ca lists the same kinds, with farm vehicles such as tractors and combines, which the regulation counts only in respect of a garage keeper’s lien. Section 43(7.1) of the Act makes a registration invalid in relation to serial number goods for the purposes of sections 30(7), 34(2) and 35(4) if a search by serial number does not disclose it. So a debtor-name search alone does not clear a fleet. Collect each vehicle’s serial number from the seller and search it.

Reading exact and inexact matches

Alberta.ca says a search result will be an exact match, an inexact match, no match, or both exact and inexact matches. It adds that inexact matches may need to be checked further, by searching the inexact name again or by a registration number search for that registration. Section 43(7.2) of the Act confirms that an inexact match does not, by that fact alone, make a registration valid. A match is therefore a lead, not a verdict. Ask the registering party, whom Alberta.ca names as responsible for questions about a result, what the registration covers, and ask the seller to explain each one.

• Search the legal name of the business and of each owner, and any former legal name the seller gives you.
• Search each vehicle, trailer, aircraft or boat by serial number.
• Follow up every inexact match with a registration number search or a question to the registering party.
• Remember that a registration may relate to one or more security agreements, and that a financing statement may be registered before a security interest attaches.
• A security interest in a fixture or growing crop may be registered at a land titles office (section 49), so ask the seller whether any such notice exists.

What a search does not settle

Section 47 says registration of a financing statement is not constructive notice or knowledge of its existence or contents to third parties, and section 49 allows a security interest in a fixture or a growing crop to be registered at a land titles office. Section 46(2) says information may be removed from the registry when a registration is no longer effective or on receipt of a financing change statement discharging it, among other cases, and Alberta.ca lists a certificate of an expired or discharged registration as a separate search. Section 50 of the Act lets a debtor, or a person with an interest in property that falls within the collateral description, give a written demand where all of the obligations under the security agreement have been performed, among other cases. Under Alberta’s Personal Property Security Act, the demand must require the secured party, not later than 40 days after it is given, to register a financing change statement that discharges or amends the registration as the case requires, or to provide the Registrar with a court order confirming that the registration need not be amended or discharged; if the secured party does not comply, the person who gave the demand may register the financing change statement on proof that the demand was given. Ask the seller for discharge confirmations on anything paid out at closing. Alberta.ca also links to the personal property registries of other provinces, so ask the seller whether the business or its assets have been located elsewhere. See the answer on running a PPSA registry search.