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Equipment Lessors, Beware

BY Josh Calderon
November 30, 2015

On Dec. 31, 2015, amendments to the conflict of laws provisions under the Ontario Personal Property Security Act (PPSA) will be active. Lessors should ensure that they search in the right jurisdictions and register their security interests in accordance with the new rules. A brief summary of the amendments is set out below.

Summary of Current Law and Amendments

Under the PPSA, the question of where to register in order to perfect a security interest is answered according to the type of collateral being granted as security. The amendments clarify the appropriate place to perfect security interests in the following:

  1. Intangibles;
  2. Mobile goods (i.e., goods normally used in more than one jurisdiction if the goods are equipment or inventory leased or held for lease by a debtor to others); and
  3. Non-possessory security inter- ests in securities, instruments, negotiable documents of title, money and chattel paper (collectively, “Intangible and Mobile Collateral”).

Perfection of a security interest in Intangible and Mobile Collateral is governed by the law of the jurisdiction where the debtor (i.e., the lessee) is located. Currently, a debtor is deemed to be located at the debtor's place of business or at the debtor's chief executive office if there is more than one place of business. Since the PPSA does not define the term “chief executive office,” it is often unclear where a secured party should perfect its security interest in transactions involving Intangible and Mobile Collateral.

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