A defect in a PPSA registration may render the security interest
ineffective which may be disastrous for a secured party. The PPSR
does not identify defective financing statements at the time of
registration. As such, a defect in a financing statement may remain
undetected until it's too late. The responsibility falls to the
secured party alone to ensure that there are no defects in a
financing statement which may render the registration
ineffective.
What is a defect?
"Defect" is defined in the PPSA as including "an
irregularity, omission or error in the registration".
Section 164(1) sets out the general rule as to defects under the
PPSA:
"A registration with respect to a security
interest that describes particular collateral is ineffective
because of a defect in the register if, and only if, there
exists:
