Retention of title clause in New Zealand: sample and registration

Sample clause

Written for account terms of Waitemata Building Supplies, a fictional Auckland building merchant selling timber and fixings to builders on credit.

Retention of Title and Security. (a) Ownership of all Goods remains with Waitemata until the Customer has paid all amounts owing on its account. (b) The Customer grants Waitemata a security interest in all Goods supplied, now or in future, and their proceeds, as security for all amounts owing. This is a purchase money security interest to the extent it secures the price of those Goods. (c) The Customer agrees that Waitemata may register a financing statement on the Personal Property Securities Register and will give any information Waitemata reasonably needs to do so. (d) The Customer waives its right to receive a verification statement and, to the extent the law allows, the rights in Part 9 of the Act that the parties may contract out of. (e) The Customer must not change its name without giving Waitemata 10 working days' notice.

Sample wording, not legal advice.

Variants

What to negotiate

• Register before or soon after delivery

  A purchase money security interest gains super priority over an earlier general security interest only if it is perfected on time: for goods other than inventory, within 10 working days after the buyer obtains possession, and for inventory, by registration before the buyer obtains possession. A supplier registering after a dispute arises is usually too late.

• Contracting out of Part 9

  Part 9 of the Act sets enforcement rights, such as notice before the secured party sells repossessed goods. Section 107 lets parties contract out of many of them where the goods are not used mainly for personal, domestic or household purposes. Account terms routinely do so; a buyer should know it is giving up those notices.

• Proceeds keep the security alive

  Building supplies are often incorporated into a building or resold. A clause that takes security over proceeds, and a financing statement that covers them, lets the supplier's interest continue in the money from a resale. Goods that become part of land, such as fixed framing, usually fall outside the personal property rules altogether.

The risk of leaving it out

Without a retention of title clause and a registration, a New Zealand supplier selling on credit is an unsecured creditor. If the buyer's bank holds a registered general security agreement, it ranks ahead over the supplier's own unpaid goods, and a receiver or liquidator can sell them for the bank, leaving the supplier to claim with the other unsecured creditors.

Why New Zealand treats it as a security interest

The Personal Property Securities Act 1999 applies to any transaction that in substance secures payment or performance, whatever the form or who holds title. A retention of title clause secures the price, so it is a security interest. It is perfected by registering a financing statement on the Personal Property Securities Register, and priority between perfected interests generally follows the order of registration, with the purchase money exception. Law checked on 21 October 2026. This page explains how the law works and is not legal advice.

Registration timing and priority checklist

Before the first supply on account, the supplier checks the buyer's legal name and company number, registers a financing statement describing the collateral, such as all goods supplied by Waitemata and their proceeds, and marks it as a purchase money security interest. It keeps the registration current, renewing it before it expires, and updates it if the buyer changes its name. Each step is cheap; missing one can cost the priority the clause was meant to give.

How this differs from Australia and the UK

New Zealand's Act came first, in 1999, and Australia's PPSA of 2009 was modelled on it, so the two work similarly, with differences in timing rules and in what happens to unperfected interests on insolvency. The UK has no general personal property register: a simple UK retention of title clause needs no registration at all, while one that claims proceeds is treated as a company charge. The companion pages cover the Australian and UK positions.

Where the clause sits in a generated document

Trade account applications, terms of sale and equipment sale agreements carry the clause. When asking the AI document generator for New Zealand terms, ask for retention of title, a purchase money security interest over goods and proceeds, consent to register on the PPSR and a name change notice, under New Zealand law.

Documents that carry this clause

Equipment sale agreement with serial numbers and an inspection windowUsed machinery changes hands on a workshop floor, and the argument afterwards is always about condition or about who damaged the door frame on the way out. This agreement records the serial numbers and the known faults, gives the buyer two days to power the machines up, and puts the rigging, the making good and the storage charge in writing.Distribution agreement template with territory and targetsAn exclusive distribution agreement is a trade: a territory in exchange for volume. This one appoints a New Zealand distributor for a skincare range at 48 per cent of recommended retail, with purchase targets rising from NZD 240,000 to NZD 420,000 across three years, and exclusivity that converts to non exclusive if a target is missed by more than 15 per cent.

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