The Personal Property Securities Register has hit a glitch only hours after launching.

The register, a critical element of the scheme introduced by the Personal Property Securities Act 2009, is the one and only source for businesses and individuals to register interests in property or to search for interests in property other than real estate. After going live at 0001 this morning the website currently warns users that it is experiencing “technical difficulties” and recommends users not to proceed with transactions requiring searches until this issue is rectified.

The online register replaces more than 40 Commonwealth, state and security registers and was designed to streamline and simplify search and registration of assets. Businesses and individuals that hold registered security interests prior to 30 January will be protected by a 24-month transition period, however security interests taken after 0001 today will not have the benefit of the transitional provisions and this is a potential trap for business. “It creates concern around the integrity of what people are now relying on and the concern that they could be proceeding with transactions without the full picture - there could be people with security interests that are not being identified,” said DLA Piper partner David East. “Stakeholders are raising questions about whether they continue with business as usual or whether they will have to have some other outcome, but there is no other option at present.”

The government, lawyers and accounts have been preparing for the introduction of the register for two years. While many large businesses will have made all the necessary arrangements, small to medium sized enterprises and some industries which were previously not required to register interests will be caught out and could face financial loss if they do not act in a timely manner. “Most large business have already amended their terms and conditions, checks and balances to make sure securities are registered when they need to be. The sector most exposed as of today is the SME sector, some of which [companies] are quite large,” said TressCox partner Alex Moriarty.

There are three key risks which a secured party faces if it does not register its security interest in time, according to East. “Firstly, it may become simply an unsecured creditor if the other party becomes insolvent.  Secondly, another secured party may gain priority by registering first and finally, the secured property may be sold or leased to another party which takes the property free from the security interest,” he said.