General Security Agreement Registration in Ontario: Everything You Need to Know
When businesses in Ontario extend credit to other businesses or individuals, they need to ensure that they are protected against the risk of default. One way to do this is by registering a General Security Agreement (GSA) with the Personal Property Security Registration (PPSR) system in Ontario.
A General Security Agreement is a legal document that grants a creditor a security interest in a debtor`s assets. This means that if the debtor defaults on their loan or credit agreement, the creditor can take possession of the assets listed in the GSA to recoup the outstanding debt. The GSA is an important legal tool for businesses that wish to secure their lending arrangements.
The PPSR is a government-run online system that records security interests in personal property in Ontario. By registering a GSA with the PPSR, a creditor can ensure that their security interest is recognized by other parties. This makes it easier to enforce the security interest in the event of default.
To register a GSA in Ontario, the creditor needs to provide a description of the assets covered by the security interest. The description should be as specific as possible to avoid any disputes or confusion later. The creditor will also need to provide the name and contact information of the debtor and any co-debtors.
Once the GSA is registered, the creditor will receive a verification statement from the PPSR. This statement confirms that the GSA has been registered and provides details of the security interest. The creditor should keep a copy of the verification statement for their records.
A GSA can be registered for any type of personal property, including equipment, inventory, accounts receivable, and intellectual property. However, there are some exceptions, such as real estate, which is registered differently. It is important to consult with a legal professional to determine what can and cannot be covered by a GSA.
In Ontario, a GSA is effective for five years from the date of registration. After five years, the GSA will expire unless it is renewed. It is important to keep track of the expiry date and renew the GSA if necessary to maintain the security interest.
In conclusion, registering a General Security Agreement with the PPSR is an important step for businesses that wish to secure their lending arrangements. It provides peace of mind for both the creditor and debtor, and helps to avoid disputes and confusion in the event of default. Contact a legal professional to get started on registering your GSA and protecting your assets.