PERSONAL PROPERTY SECURITIES ACT 2009 - SECT 50 Taking investment instrument free of security interest

PERSONAL PROPERTY SECURITIES ACT 2009 - SECT 50

Main rule

  (1)   A purchaser (see subsection   (3)) of an investment instrument, other than a secured party, takes the instrument free of a security interest in the instrument if:

  (a)   the purchaser gives value for the instrument; and

  (b)   the purchaser takes possession or control of the instrument.

Exception

  (2)   Subsection   (1) does not apply if the purchaser takes the instrument with actual or constructive knowledge that the taking constitutes a breach of the security agreement that provides for the security interest.

  (3)   In this section:

"purchaser" , in relation to an investment instrument, means a person who takes the instrument by sale, lease, discount, assignment, negotiation, mortgage, pledge, lien, issue, reissue or any other consensual transaction that creates an interest in personal property.