Deed of Charge in Australia: What It Is, When to Use It, How It Works

If you’re extending credit, lending money, or taking on more risk with customers or partners, securing your position isn’t just smart - it can be the difference between getting paid and writing off a bad debt.

That’s where a deed of charge comes in. It’s a practical way for your business to take security over a customer’s or borrower’s assets so you sit ahead of unsecured creditors if things go wrong.

In this guide, we’ll break down what a deed of charge is, how it works under Australia’s Personal Property Securities Act (PPSA), when to use it, the key terms to include, and the steps to get it signed and registered properly.

What Is A Deed Of Charge?

A deed of charge is a legal document a debtor signs to grant you security over their assets. In plain English, it gives you rights over specific property (or sometimes “all present and after-acquired property”) if they don’t pay.

Traditionally, people referred to “fixed” and “floating” charges. Since the PPSA took effect, we more commonly talk about “security interests”. The market still uses the phrase “deed of charge”, but in practice the modern equivalent is usually a targeted security deed (over specific assets) or a broader all-assets document often called a General Security Agreement (GSA).

A deed is a special kind of legal instrument - it’s executed with extra formality and doesn’t need consideration to be binding. If you’re new to deeds in Australia, it’s worth understanding what a deed is in Australian law before you prepare one.

Common use cases include securing a business loan, trade credit accounts, intercompany loans and vendor finance. If you want a security interest over most or all of a company’s assets, a General Security Agreement is usually the right tool. If you want security over specific items (for example, a vehicle or equipment you supply), a targeted deed of charge can do the job.

How Does It Work Under The PPSA?

The PPSA changed how personal property security works in Australia. Instead of the old state-by-state and “company charge” systems, we now have a national register and consistent rules on priority.

Here are the essentials:

• Attachment and enforceability: Your security interest “attaches” when value is given (e.g. you supply goods or lend money) and the debtor has rights in the collateral. It becomes enforceable against the debtor and third parties when the agreement meets PPSA requirements (usually by being signed and adequately describing the collateral).
• Perfection: To maximise protection, you generally need to perfect your security interest. The most common way is to register it on the Personal Property Securities Register (PPSR). Possession or control can also perfect certain securities, but registration is the default for most business arrangements.
• Priority: If multiple parties claim security over the same collateral, the PPSA’s priority rules decide who gets paid first. Usually, first to perfect wins - but a properly registered Purchase Money Security Interest (PMSI) can leapfrog others for inventory or equipment you finance or supply.
• Enforcement: If the debtor defaults, a perfected security interest gives you stronger enforcement rights and better recovery prospects, often ahead of unsecured creditors and, in some cases, other secured parties.

If you’re new to the PPSR, this is a good moment to read why it matters for your business and how it protects you when offering credit or selling goods: PPSR in Australia - why it matters.

Registration needs to be accurate and timely (especially for PMSIs). We help businesses set this up correctly through our fixed-fee service to register a security interest.

When Should Your Business Use One?

Think about a deed of charge (or GSA) when you are taking on payment risk and want a back-up plan if your counterparty can’t pay.

Typical scenarios include:

• Business loans or credit facilities: You lend money to a company and want hard security over its assets to sit ahead of unsecured creditors. Combine with a tailored Secured Loan Agreement for clarity on repayment terms.
• Trade credit accounts: You supply goods or services on terms and need better protection than personal promises. A deed of charge (or GSA) paired with credit terms can significantly improve your recovery position.
• Vendor finance and instalment sales: You let a buyer pay over time for equipment or a business purchase. Security over the goods (and sometimes other assets) reduces your downside if payments stop.
• Intercompany or founder funding: Group entities or founders funding a new company may want security to formalise priority and treatment if the startup faces financial stress.
• Landlords and counterparties managing risk: In some commercial contexts, landlords or key suppliers ask for a security interest to backstop obligations like make-good costs or minimum purchase volumes.

In each case, the goal is the same: reduce the risk of non-payment, and put yourself in a stronger position if you need to enforce.

Key Terms To Include (And Common Pitfalls)

Your deed should be clear, enforceable and PPSA-friendly. Here are the core clauses to build in.

Core Clauses

• Secured obligations: Define precisely what debts and obligations are secured (e.g. all amounts owing now and in future under your loan, credit terms or any related agreement).
• Collateral description: Describe the assets covered in a way that lines up with PPSR registration requirements. For an all-assets security, say “all present and after-acquired property” (and consider standard exclusions). For specific assets, identify them clearly (serial numbers, make/model, location).
• Fixed vs floating concepts: If relevant, distinguish assets intended to be subject to “fixed” control (e.g. certain equipment) from circulating assets like stock or receivables. The PPSA uses different terminology, but the concepts still matter for enforcement priority.
• Positive and negative covenants: Include obligations to maintain and insure collateral, not dispose of key assets without consent, and provide access to inspect records.
• Events of default: Spell out what triggers enforcement (non-payment, insolvency events, misrepresentations, material adverse change, unauthorised disposals, etc.).
• Enforcement rights: Set out powers on default, such as taking possession, appointing a receiver, collecting debts, and selling collateral.
• Power of attorney: Limited authority allowing you (or a receiver) to sign documents and take steps needed to realise the security.
• PPSA wording: Include PPSA-specific provisions addressing registration classes, confidentiality of PPSA information requests, contract out (where permitted) of certain notice requirements, and authorisation to register financing statements.
• Priority and intercreditor: If other secured parties exist (e.g. a bank), a separate priority deed may be required to set the order of who gets paid from shared collateral.
• Guarantees: If the debtor is a company with few assets, consider a director or parent company guarantee alongside the security. Our guide to personal guarantees in Australia covers the risks and protections to think about.

Execution And Formalities

Because this is a deed, correct execution is critical. Companies can execute under section 127 of the Corporations Act - here’s a handy overview of signing documents under section 127. If an individual is granting security, check witnessing requirements in your state or territory and whether any additional formalities apply.

Common Pitfalls To Avoid

• Vague or misaligned collateral descriptions: If the deed and PPSR registration don’t match, you risk losing priority or the registration being ineffective. Be precise and consistent.
• Late or incorrect PPSR registration: PMSI registrations have tight timing rules. Even for non‑PMSI security, register as soon as possible to avoid being pushed behind later secured creditors.
• Overlooking existing security: Banks and other lenders may already hold security. Without a priority deed, your security can sit behind theirs.
• Relying on “security” language in general T&Cs: A standalone deed of charge or GSA is more robust. If you rely on standard terms only, you can trip up on enforceability or execution issues.
• Not linking the debt and security clearly: Make sure the underlying contract (loan, supply, or credit terms) ties in cleanly with the deed’s “secured obligations”.
• Execution gaps: Missing signatures, wrong capacity (e.g. signing as director but no company execution), or lacking witness details can cause headaches at enforcement time.

Step-By-Step: Create And Register A Deed Of Charge

Here’s a simple roadmap to get it right the first time.

1) Choose Your Security Structure

Decide whether you need an all-assets security (typically a General Security Agreement) or a targeted security over specific collateral through a deed of charge. Consider how your customer operates, the nature of the debt, and what’s practical to enforce.

2) Draft The Deed To Fit Your Deal

Tailor the secured obligations, collateral description and PPSA provisions to your arrangement. Align the deed with your loan or supply terms, and build in the enforcement and covenants you’ll rely on if things go sideways.

3) Execute Correctly As A Deed

Use the correct execution block for companies or individuals, and follow deed formalities. For companies, section 127 execution provides evidentiary benefits if done properly - see our guide to section 127 execution.

4) Register Promptly On The PPSR

Register your security interest with accurate details (grantor name, ACN/ABN, collateral class, PMSI status if applicable). Timing matters - particularly for PMSIs over inventory (before supply) and equipment (typically within 15 business days after the grantor takes possession). If you need support, our fixed-fee service can register your security interest and confirm it’s done right.

5) Keep Records And Monitor Renewals

Keep copies of signed deeds, PPSR verification statements and diaries for renewal dates. If details change (name, ACN, collateral), update your registration to maintain perfection.

6) Plan For Enforcement (And Hope You Don’t Need It)

Line up a practical pathway: how you’ll identify and access collateral, appoint a receiver if needed, and coordinate with any senior secured creditors. Understanding this now avoids confusion later.

Pair It With The Right Documents

A security deed is just one part of the toolkit. Most businesses pair it with clear commercial terms - for example, a Secured Loan Agreement for lending, or credit terms that set out pricing, delivery, payment and default arrangements. Where you’re offering regular credit, it’s common to include security wording in your credit application or terms, but for stronger protection many businesses still use a standalone security deed as well.

What Other Documents Will You Need?

The exact list depends on your model, but these are the usual suspects alongside a deed of charge or GSA:

• Secured Loan Agreement: Sets out the commercial deal (amount, interest, repayments, fees, defaults) and ties in with your security document. See our Secured Loan Agreement if you’re financing customers or related entities.
• Credit Terms or Terms of Trade: Your day‑to‑day supply terms, including payment, delivery, risk, default and limitation of liability. If you offer credit broadly, consider a robust credit application process and clear terms.
• General Security Agreement: Where you need an all‑assets security from a company instead of (or in addition to) a targeted charge, use a GSA.
• Personal or Corporate Guarantee: Extra comfort where the borrower’s asset base is thin, covered in our guide to personal guarantees.
• PPSR Registration Support: Accurate, timely registrations are critical. Our team can help you register on the PPSR and manage renewals.

If your debtor is a company, it’s also helpful to understand how deeds work and how companies sign documents - our overviews on deeds and section 127 execution cover the basics.

Key Takeaways

• A deed of charge is a practical way to secure your position when you lend or extend credit - it grants a security interest over assets so you’re better protected if the debtor defaults.
• Under the PPSA, you perfect your security by registering on the PPSR, which drives your priority against other creditors. Timing and accuracy of registration are crucial.
• Use an all‑assets General Security Agreement for broad coverage, or a targeted deed of charge for specific collateral. Align the security with your underlying contract.
• Key clauses include clear secured obligations, precise collateral descriptions, robust default and enforcement rights, PPSA wording, and (where needed) guarantees and priority arrangements.
• Execute correctly as a deed and register promptly. Avoid common pitfalls like vague collateral descriptions, late PPSR filings, and ignoring existing senior security.
• Pair your security with solid commercial documents - a Secured Loan Agreement or strong terms of trade - and keep records and renewals in order.

If you’d like a consultation on preparing or registering a deed of charge for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.