After-Acquired Property Clause

After-Acquired Property Clause

A phrase in a mortgage (an interest in land that furnishes security for payment of a debt or performance of an obligation) that provides that any holdings obtained by the borrower subsequent to the date of the loan and mortgage will automatically constitute additional security for the loan.

References in periodicals archive ?
A "security interest arising by virtue of an after-acquired property clause has equal status with a security interest in collateral in which the debtor has rights at the time value is given under the security agreement." Id.
This is very doubtful indeed.(348) A sale of proceeds implies that after-acquired property clauses might be applied to outright purchases of accounts, chattel paper, and, indeed, any property that might constitute proceeds.(349)
To be sure, after-acquired property clauses are routine in security agreements pertaining to accounts receivable--but only where the accounts are collateral for a loan.
Nor can anything in Article 2 authorize after-acquired property clauses, even by analogy.
First, credit managers for companies that sell business equipment (or other non-inventory items) can still secure the priority position on new sales of business equipment (even over creditors with prior security interests containing after-acquired property clauses) so long as they file a financing statement within 10 days of delivery of the new equipment.