Purchase-Money Security Interest Procedure (ON)

Summary

In Ontario, the Personal Property Security Act, R.S.O. 1990, c. P.10 (the "PPSA") governs all security interests in personal property. A vendor or lender can take a special security interest in collateral for all or part of the price of that collateral. This is called a purchase-money security interest ("PMSI"). For a definition of "purchase-money security", see s. 1(1) of the PPSA. In order to create a PMSI, the interest must qualify as such, and the vendor must strictly follow the statutory procedure. This practice note describes that procedure in detail and includes some practical tips for ensuring the PMSI protects the vendor/lender as much as possible.