Find Me Funders
After-acquired property
Also called after-acquired property clause, hereafter acquired, future assets clause.
The clause extending a security interest to collateral the business acquires after signing, so a lien granted years ago attaches to equipment and receivables that did not exist at the time.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
Without this clause a lien attaches only to what existed on the day the security agreement was signed. With it, the truck you buy next spring becomes collateral for last year's loan the moment you own it.
How it works
The security agreement grants an interest in described collateral "now owned or hereafter acquired", and the UCC-1 covers the same description. Attachment happens automatically as each new item comes into your rights, with no further filing and no further signature. This is what makes a lien on inventory or receivables meaningful at all — both classes turn over constantly, so a lien fixed to a single day's contents would be worthless within a month.
The limits
- A purchase-money security interest in specific equipment can prime an earlier after-acquired clause in that item, if the Article 9 steps are followed
- Certain categories have statutory restrictions, including consumer goods acquired more than a short period after the agreement, and commercial tort claims
- Property acquired after a bankruptcy petition generally falls outside a pre-petition lien, subject to important exceptions for proceeds and to the separate treatment of cash collateral
Where you meet it
In the collateral description of the security agreement, in a sentence most borrowers read as boilerplate, and again on the public UCC-1 where anyone searching your name can see it.
Where this one catches people
This is the clause that turns a small old debt into a permanent constraint. A modest advance taken three years ago, granted over all assets now owned or hereafter acquired, today covers every machine you have bought since, the inventory you built up, and receivables from customers who were not your customers then. The remaining balance may be tiny. The encumbrance is not.
When you go to finance the next machine, the vendor's lender runs a search, finds the filing, and now needs either a purchase-money carve-out done properly or a subordination from a funder who has no commercial reason to give one. That is where deals stall, and the stall is caused by paperwork rather than by credit.
Two defences, both boring. Read the collateral description before signing: a filing limited to specific equipment, or to a named class such as accounts, is a completely different animal from an all-assets grant with a hereafter-acquired clause. And chase the termination the day the balance is paid, in writing, then check the state filing system yourself.
Where you will meet this term
Read next
After-acquired property — common questions
What does after-acquired property mean?
The clause extending a security interest to collateral the business acquires after signing, so a lien granted years ago attaches to equipment and receivables that did not exist at the time.
Where does after-acquired property catch people out?
This is the clause that turns a small old debt into a permanent constraint. A modest advance taken three years ago, granted over all assets now owned or hereafter acquired, today covers every machine you have bought since, the inventory you built up, and receivables from customers who were not your customers then. The remaining balance may be tiny. The encumbrance is not.
Is after-acquired property the same as an interest rate?
After-acquired property is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does after-acquired property apply to?
Merchant Cash Advance, Working Capital, Term Loan, Business Line of Credit, Equipment Financing, Asset-Based Lending.
Is there a worked example of after-acquired property?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside after-acquired property?
Blanket lien, Collateral, Financing statement, Floating lien, Perfection.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.