When Less Is Not More – PPSA Pitfalls For The Unwary

The Takeaway

A recent Alberta decision highlights potential pitfalls for lenders registering against equipment outside of Ontario; Alberta legislation requires a lender to describe "serial numbered" equipment against which a purchase money security interest (PMSI) will be asserted by year, make, model and VIN/serial number in a schedule to the registration, or by "type and kind" in the general collateral description box. The court held that "type and kind" requires a lender to provide sufficient detail, including the VIN/serial number, so that each piece of equipment secured is readily identified from similar equipment against which no interest is claimed. Failure to include this information can defeat a lender's equipment PMSI interest and result in its loss of expected super-priority. The legislative provisions relied upon by the Alberta court are mirrored in all other Canadian provinces¹, except for Ontario.