This document is a general security deed.
It is common for banks and finance companies to require borrowers to provide security to secure a loan. This ensures that should the borrower fail to repay the loan in full or in part, the lender can realise the security and thus mitigate any risk of non-repayment. In certain instances, it is prudent for lenders not associated with banks or finance companies to require borrowers to provide security for loans provided.
The most common securities provided in Australia are an interest in real property or personal property.
Personal property security
This precedent is a general security deed that is used for securing an interest in personal property. The general security deed may be used when a secured party wishes to take an interest over all of the grantor’s personal property as security for payment or performance of an obligation.
Personal property is defined in the Personal Property Securities Act 2009 (Cth) (PPSA) to mean property (including a licence) other than:
- a right;
- an entitlement; or
- an authority,
- granted by or under a law of the Commonwealth, a state or a territory; and
- declared by that law not to be personal property for the purposes of the PPSA.
Security deed on other types of property
The general security deed may also be used in circumstances where the secured party wishes to secure not only an interest in personal property but also an interest in other types of property (for example, water rights and fixtures) except land. Although the general security deed may also be used as security for land, any registration on the personal property securities register will not perfect the security interest in relation to the land. A secured party will therefore normally take a separate mortgage over land to ensure the benefits of indefeasibility.
The PPSA sets out rules about the creation and nature of a security interest. These rules must be considered in the drafting of the document, which under the PPSA, is referred to as a security agreement (see section 10 of the PPSA). Under the PPSA, the parties are free to negotiate terms relating to the security interest. An agreement giving rise to a Security Interest is effective according to its terms (see section 19(1) of the PPSA).
- Basic loan agreement
- Guarantee of payment of loan
- Amendment and restatement agreement
- Deed of priority
- Forbearance of debt agreement
- Real property mortgage
- Deed of assignment of debt
- Loan agreement checklist
This document has been authored for Lexis Nexis by Elise Margow, Principal, Legally Speaking.
This document is prepared with the assistance of Specialist Editors Geoff Geha, Partner, Clayton Utz and Karen Lee, Principal and Consultant, Legal Know-How.