Retention Of Title Clause Checklist
Retention of title lets you reclaim unpaid goods if a customer fails — but only if the clause is drafted, registered and operated correctly, which this checklist helps you confirm.
What's included
- What a retention-of-title clause does and why it matters in insolvency
- The checklist for making the clause effective
- The PPSR registration step that backs it up
- Why the clause must be lawyer-drafted
6 min read
Why retention of title can save a recovery
A retention-of-title (RoT) clause keeps ownership of goods with you until they are paid for in full. If a customer goes into liquidation owing for stock you supplied, a properly drafted and registered RoT clause can let you reclaim those goods ahead of unsecured creditors — sometimes the difference between recovering something and nothing.
The protection is real but technical. The clause must be in your accepted terms, and under the Personal Property Securities Act it generally needs to be registered on the PPSR to be effective in an insolvency. Use the checklist below, and have the wording set by a lawyer.
The retention of title checklist
- RoT clause present in your terms of trade (lawyer-drafted)
- Terms accepted by the customer before supply
- Clause retains title until goods are paid for in full
- Clause addresses proceeds if goods are on-sold
- Security interest registered on the PPSR against the correct entity
- Registration made within any required timeframe
- Goods identifiable as yours where practical
- PPSR registration kept current and not lapsed
- Records link invoices to the goods supplied
- Process to act quickly on notice of the customer's insolvency
How to use it
Work through this when you set up your terms and again whenever you review them. The two failure points are an unsigned clause and an unregistered or lapsed PPSR security interest — both can wipe out the protection. Confirm the clause sits in your terms of trade and that registration is current.
If a customer enters administration or liquidation, act immediately — RoT rights can be lost by delay. Where recovery is needed beyond reclaiming goods, refer the debt.
This is general business information, not legal advice. Retention-of-title clauses and PPSR registration are technical — get specific legal advice for your business.
Tips
- An RoT clause must be in accepted terms and usually registered on the PPSR to bite.
- Register the security interest against the correct legal entity and keep it current.
- Act fast on any notice of the customer's insolvency — delay can lose the right.
- Have the clause and registration approach drafted by a lawyer.
FAQ
Is the RoT clause enough on its own?
Usually not in an insolvency — under the PPSA it generally needs PPSR registration to be effective against other creditors.
What if I forgot to register on the PPSR?
Your protection in an insolvency may be lost. Register security interests promptly and keep registrations from lapsing.
Can I reclaim goods that have been on-sold?
It depends on the clause and the proceeds wording. This is technical — get legal advice on a proceeds clause.
Templates are a head start — not legal advice
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