Chattel mortgage (in the context of a personal property security interest)

A chattel mortgage is a mortgage over personal property rather than land. This type of mortgage at common law assigns legal ownership of personal property to a creditor, with a right of redemption once a loan has been repaid.

In the context of the Personal Property Securities Act 2009 (Cth) (PPSA) a chattel mortgage is included in section 12 as being a security interest that is capable of being registered on the Personal Property Security Register (PPSR). This means that if a chattel mortgage is granted and that transaction “in substance” secures payment or performance of an obligation (e.g. repayment of loan) then a secured party must register their interest of the PPSR in order to “perfect” the security interest.

Failure to perfect a security interest will invalidate the chattel mortgage and a secured party will lose their right to enforce their security interest under the PPSA upon insolvency.