Who owns your car – you, your company or the financier?

If your vehicle is leased by your company, with finance obtained for that lease, your finance company will register a security interest over your company.

Often, the vehicle registration is in your name personally and not the company name.

What happens when the company ceases to trade and/or is placed into liquidation? Who owns the vehicle? You, the company or the finance company?

The company liquidator will claim ownership of the vehicle for any equity remaining after the amount owing to the finance company has been accounted for.

The finance company will claim rights to sell the vehicle if finance repayments do not continue.

You, personally, will assert ownership as you use the vehicle for both work and family purposes, and the vehicle may well be registered in your name at the Roads & Maritime Service (RMS).

A vehicle can be registered in the name of one person or a company name, who is considered to be the operator of the vehicle, not necessarily the owner of the vehicle (see sections 5, 6 and 7 of the Road Transport (Vehicle Registration) Regulation 2017 (NSW).

If your company pays for the finance of your vehicle, and the vehicle is registered in your name personally, we recommend that you register a Security Interest in your personal name on the Personal Property Securities Register (PPSR), recording the existence of a lease by you to your company.

A lease is required to be registered on the PPSR  if it extends beyond 2 years. Failure to register such a lease will result in the lessee retaining possession if there is a dispute as to ownership, or the lessee company is placed into liquidation.

Our firm had a recent claim by a company liquidator who:

  1. engaged the Sheriff to seize the vehicle from our client’s residence;
  2. demanded that our client continue to pay the finance which was entered into with the company, not our client;
  3. demanded that our client personally pay the liquidator the equity in the vehicle (after the finance amount owing had been accounted for), prior to release of the vehicle.

The fact that the vehicle was registered at RMS in our client’s name personally did not dissuade the company liquidator or the Sheriff from the liquidator’s claim that the company was the legal owner of the vehicle, or obtain his consent to release the vehicle without payment.

Once you register your security interest in the vehicle, if the company is placed into liquidation, there can be no dispute between yourself and the company liquidator as to ownership of the vehicle. You will still need to continue to pay the lease repayments on the vehicle, which your company had previously paid.

It is also important to undertake a PPSR security interest check prior to purchasing a vehicle, to ensure that any finance owing on the vehicle has been paid.