Legal Definitions - after-acquired property

Definition: After-acquired property, also known as future-acquired property, refers to personal or real property that a borrower acquires after taking on a debt secured by all of their property. This property becomes additional collateral for the debt.

According to UCC § 9-204, after-acquired property includes improvements to real property used as security on a trust deed or mortgage, as well as personal property pledged in a security agreement.

• A retail store owner pledges all of their inventory, including any inventory acquired in the future, to obtain funds from a creditor to buy additional inventory.
• A mortgagee includes an after-acquired property clause in a mortgage, stating that they will have an equitable lien in all the real property that the mortgagor obtains after the mortgage is executed.
• In bankruptcy, property acquired by the bankrupt person after they have filed for bankruptcy is protected from creditors’ claims and is not included in the assets that may be used to pay any of the debts that existed at the time of filing for bankruptcy.
• In wills and estates, after-acquired property refers to property a testator acquires after making a will.

The examples illustrate how after-acquired property can be used as collateral for a loan or as a way to secure a mortgage. In bankruptcy, after-acquired property is protected from creditors' claims, and in wills and estates, it refers to property acquired after making a will.