Also known as: after acquired collateral · afteracquired collateral · future collateral · UCC 9-204
Written by attorneys · grounded in primary & secondary sources — see below
A clause in a security agreement that extends a security interest automatically to property the debtor acquires after the agreement is executed. The clause operates once the debtor obtains rights in the new collateral, provided the agreement describes the collateral type and value has been given. It supports floating liens on assets such as inventory or equipment without requiring a new agreement for each acquisition.
Anchor Bank extended a revolving line of credit to Artemis Logistics under a security agreement covering all present and future inventory. Artemis later used separate supplier credit to purchase additional raw materials that remained identifiable in its warehouse. When Artemis defaulted, the after-acquired clause attached the bank's interest to the new inventory upon Artemis acquiring rights in it.
Alliance Holdings lent funds to Astra Aerospace under an agreement granting a security interest in all equipment now owned or hereafter acquired. Astra subsequently purchased specialized machinery through a separate lease arrangement. The clause attached the lender's interest to the new machinery once Astra obtained rights in it, even though the purchase occurred outside the original loan.
Select any source to read its text and confirm it supports the definition.
No. A single after-acquired property clause in the original agreement allows the security interest to attach automatically when the debtor later acquires rights in property of the described type.
Supporting sources
The clause does not attach to consumer goods acquired more than ten days after value is given or to commercial tort claims. Inventory, equipment, and farm products fall outside those exceptions.
Supporting sources
Not automatically. Courts enforce the earlier clause according to its terms unless the parties expressly limited or terminated it, even when the new assets were acquired through distinct financing.
Supporting sources
Attachment occurs at the moment the debtor acquires rights in the new property, provided the security agreement already describes the collateral type and the secured party has given value.
Supporting sources