Financial ServicesFinancial Services e-LERT: Repealed Provisions are Fixed……Finally!Published: 11/08/2010 As mentioned in previous e-LERTs, when the Personal Property Security Act (Ontario) (“OPPSA”) was amended on August 1, 2007, certain provisions were repealed prematurely, causing uncertainty in the lending community. As part of omnibus legislation intended to make business in Ontario more efficient, those inadvertent slips were recently fixed when Bill 68, An Act to promote Ontario as open for business by amending or repealing certain Acts, passed into law on October 25, 2010. The amendments relating to the OPPSA include the following: Limiting the Collateral Unlike Article 9 of the Uniform Commercial Code or other personal property security act (“PPSA”) jurisdictions in Canada, the OPPSA registry does not yet require a specific collateral description but rather uses a general “check the box” system where a secured party simply checks the box pertaining to the particular collateral (i.e. inventory, accounts, equipment, motor vehicle, consumer goods or other). In addition to “checking the box,” a secured party has the option to include a description of the collateral. Prior to August 2007, a secured party’s interest in collateral would be limited by such optional description if one were filled out in the financing statement. When the provision containing this limitation was repealed, lenders needed to obtain waivers to ensure that interests in collateral were limited to the described collateral. With the latest amendment, the optional description in a financing statement once again limits a secured party’s interest in collateral (other than rights in proceeds). This provision is retroactive to August 1, 2007. Time for a PMSI Ontario purchase money security interest (“PMSI”) lenders are now placed on equal footing with lenders in other PPSA jurisdictions with respect to the time to perfect security interest and to rank in priority to existing security registrations. That time period, formerly ten (10) days, has now increased to 15 days. Note that this amendment is not retroactive and takes effect on October 25, 2010. Redefining the PMSI The enactment of the Securities Transfer Act, 2006 introduced some amendments to the OPPSA. One such amendment mistakenly deleted the exclusion of sale-lease back transactions from the definition of PMSI. The previous definition has now been restored and a sale-lease back is no longer considered a PMSI. This amendment is retroactive to January 1, 2007, which may cause concerns for any lender who relied on the definition as it was in the intervening period. For more information, please contact: Deborah Grieve Related information Previous Cassels Brock e-LERTs about the PPSA (Ontario):
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