The Bills of Sale and Other Instruments Act 1955 provides a system of registration of security interests on goods, with the exception of motor vehicles, certain boats and outboard motors (these will be registered on the REVS system).

This allows creditors to record their interest in the plant and equipment of a business. As a buyer, you can do a “Bill of Sale” search as part of your investigations on the business you are purchasing to ensure that there is no money owing to creditors on any business assets before your purchase and ultimately limit your risk against any repossession by a creditor after settlement.

For example, if you are buying a real estate agency, plant and equipment such as the photocopier, computers, etc may be subject to a rental agreement or it may be registered on a Bill of Sale by a creditor.  Carrying out the Bill of Sale search will give you peace of mind in ensuring that any plant and equipment you purchase with the business is unencumbered.

If the Bill of Sale search reveals that some plant and equipment are actually encumbered then you should, if the special conditions of the contract are drafted accordingly, be able to terminate or renegotiate the contract of sale and request that the Bill of Sale is discharged prior to settlement.

This search is often overlooked when buying a business even though it is one of the more significant searches that need to be carried out.