Searching liens under the Personal Property Security Act in Newfoundland and Labrador

In Newfoundland and Labrador, a buyer checking a business for liens is dealing with more than one registry. The Personal Property Registry holds electronic notices of interests in personal property under the Personal Property Security Act. The Lien Check Service searches it by serial number. The same Act allows notices of security interests in fixtures and crops to be registered in the Registry of Deeds, and claims for mechanics’ liens against real property sit in the Registry of Mechanics’ Liens. This guide sorts out which record answers which question, so that a purchase of a business with equipment, fixtures and premises is not checked in only one place.

The Personal Property Registry and Lien Check

The provincial government describes the Personal Property Registry as a paperless, electronic registry of notices of interests in personal property, such as car loans. Its Lien Check Service is aimed at someone about to buy a previously owned item, and the page says it can search for loans against cars, boats, trailers, mobile homes, aircraft and outboard motors. You search using a serial number, such as a vehicle identification number, and the service can be reached remotely or from the computer in the Registry of Deeds office in St. John’s. It answers a question about a single item, so it complements, but does not replace, a search by the seller’s name.

What the Act says about searches

The Act allows a person to search the records of the registry and obtain a printed search result, which may be conducted according to criteria including a registration number and the serial number of goods prescribed as serial numbered goods. A printed result that purports to be issued by the registry is receivable as evidence and is, in the absence of evidence to the contrary, proof of the registration of any financing statement it relates to. The Act also lets a person bring an action against the Crown to recover loss or damage from an error or omission in the operation of the registry, if the loss resulted from reliance on a printed search result. It sets limits on that action.

Fixtures and crops are registered elsewhere

The Act provides that a security interest in a fixture and a security interest in a crop may be registered in the Registry of Deeds by submitting a notice in accordance with the regulations. If the business has equipment bolted into its premises, or is a farm, a search of the Personal Property Registry alone may not be enough. Ask your lawyer whether a Registry of Deeds search is needed for those assets, and which lands and owners it should cover.

Mechanics’ liens sit in their own registry

The Registrar of Deeds is also responsible for the Registry of Mechanics’ Liens, which permits registration of a claim for lien against real property for work done or to be done, or materials placed or provided or to be placed or provided, on a particular property. If the sale includes land or a building, or the business has had renovation or construction work done, ask whether a search of that registry is part of the real property review. The registry page says a claim for lien must state, among other things, the full name and address for service of the person claiming the lien and the full name and address of the owner, or of whom the lien claimant believes to be the owner. Searching by the owner’s name is therefore a sensible question for your lawyer.

Errors that matter and errors that do not

The Act says the validity of the registration of a financing statement is not affected by a defect, irregularity, omission or error unless it is seriously misleading, and that proving a defect is seriously misleading does not require proof that anyone was actually misled. It also provides, subject to its subsection (10), that a registration is invalid if there is a seriously misleading defect, irregularity, omission or error in the name of a debtor required to be included in the financing statement, other than a debtor who does not own or have rights in the collateral, or in the serial number of collateral that is consumer goods of a prescribed serial-numbered kind. Whether a typing error in a name or serial number is seriously misleading is a question for your lawyer, so do not treat an imperfect match as a clear search. Ask your lawyer to review near matches. If the business owns land, ask separately how real property is searched. Keep a list of every name and serial number searched. Keep the printed result with the closing records, because it shows what the registry disclosed on the day of the search and can be compared with a later one.

• Which assets are serial numbered and should be run through Lien Check.
• Whether a search by the seller’s name has been done in the Personal Property Registry.
• Whether fixtures or crops are part of the sale and need a Registry of Deeds search.
• Whether the sale includes land, and whether the Registry of Mechanics’ Liens should be searched.
• How each registration found will be dealt with at closing.

Compare this with which liens a registry search will miss, which explains why one registry is never the whole picture.