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ARTICLE · 24 MAY 2017

Lessons Learned: Lesson Eight – Never Use A Caution Filing Unless Section 6 Applies

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In a recent case, our firm observed an equipment lessor who registered a Personal Property Security Act (Ontario) (PPSA) financing statement indicating that the registration was a "caution" filing.

CanadaFinance and Banking
Ben Goodis
Ben Goodis
Jonathan Fleisher
Jonathan Fleisher
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In a recent case, our firm observed an equipment lessor who registered a Personal Property Security Act (Ontario)1 (PPSA) financing statement indicating that the registration was a "caution" filing. In the circumstances of that case, this was an unexpected finding, as the context was not appropriate for this type of registration.

It is likely that in this case, the lessor did this out of a familiarity with registering financing statements in the United States, where a caution or precaution filing is used to distinguish between a true lease and a finance lease. However, this is simply not the law under today's PPSA.

Caution Filings in Ontario

Caution filings relate only to the scenario contemplated by section 6 of the PPSA, where collateral that is subject to a security interest in one jurisdiction is brought into, or is intended to be brought into, another jurisdiction for purposes other than transportation through the other jurisdiction.

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