Investor's wiki

After-Acquired Clause

After-Acquired Clause

The thing Is a Pursuing Acquired Clause?

An after-acquired clause is a provision remembered for legal contracts guaranteeing that subsequent acquisitions of assets will be remembered for the debtor's liability to the lender. It is once in a while likewise alluded to as the "after-acquired property clause."

Grasping an After-Acquired Clause

An after-acquired clause is a proactive strategy that directs that all property acquired by the debtor can be automatically added to the rundown of collateral joined to the debt or loan agreement. This important property can address a wide range of assets or claims of value, including real estate, inventory, and accounts receivable postings.

By remembering this provision for the original contract or loan agreement, the lender dodges the problem and bother of expecting to go through a new and separate interaction to change the terms of the loan each time the debtor might increase their assets or claim any extra property. The lender doesn't have to start any new cycle or make any extra strides for this condition to come full circle. The lender additionally doesn't have to worry about continually monitoring and tracking any changes in assets the debtor might experience.

Benefits and Disadvantages of an After-Acquired Clause

This clause is utilized as a method for giving extra protection to lenders. The clause guarantees that new purchases can be seized assuming recently held loan payments have defaulted or on the other hand assuming the debtor in any case neglects to satisfy their obligations. This type of clause is generally remembered for bond arrangements and mortgage agreements.

The after-acquired clause might be useful for borrowers who don't have the greatest credit and may represent a higher risk for lenders. These lenders might be more pleasant to broadening credit assuming that they realize they will have the opportunity to grow their likely claims to envelop extra collateral eventually.

Notwithstanding, it can have a few hindrances for borrowers, too. Because of this clause, the borrower's current, existing lenders will automatically have a claim not exclusively to the assets they own at the time they cause that debt, yet additionally to any extra assets they might add during the life expectancy of the loan.

This means future assets acquired during that period might be subject to the automatic placement of a lien or other claim. The borrower may then experience issues utilizing those equivalent assets to acquire new credit or loans. This situation can limit their opportunities for expanding their accessible credit or generating financial growth.


  • Saves time reporting assets

  • Protects lenders in case of borrower default

  • Can be used as a bargaining chip by borrowers


  • Borrowers can have future assets seized

  • Asset forfeiture can affect new credit or loans

  • Can limit opportunities to use new collateral to generate growth

## The Bottom Line

After-acquired clauses can benefit both the lender and borrower however are commonly utilized as a way for the lender to gain access to property got by the borrower after the signing of an agreement. It tends to be a way for borrowers who may not in any case be considered for a loan to gain endorsement from the lender. Notwithstanding, borrowers should know about the ramifications such a clause will have on their ability to utilize future collateral to get new loans or create growth.


  • The clause says that any assets the debtor secures at a later point in time will be added to the rundown of collateral that was put up related to the debt or loan agreement.
  • An after-acquired clause is a provision in legal contracts to account for any future assets a debtor could get.
  • In numerous ways, the clause gives extra protection to lenders.
  • An after-acquired clause can be utilized as a bargaining chip a not in any case meet collateral by a borrower requirements.
  • The purpose of such a clause is to keep away from the time, exertion, and cost of going through another cycle to change the loan terms each time the debtor adds to their assets.


What Is Future Property?

Future property is any property acquired or contributed after the original issue date. It alludes to property that is expected to be acquired subsequent to, or after, the date of the loan agreement execution.

The thing Is Considered Pursuing Acquired Property?

After-acquired property is personal or real property that a borrower gets after having assumed a debt secured by the entirety of their property. This property then, at that point, turns into extra collateral for the debt. This can incorporate improvements to real property utilized as a security on an agreement like a trust deed or mortgage. It can likewise incorporate personal property that has been pledged.

Could a Mortgage at any point Have an After-Acquired Property Clause?

Indeed, a mortgage can have such a clause. Commercial properties explicitly will have an after-acquired clause expressing that the mortgagee will have an equitable lien in all the real property that the mortgagor gets after the mortgage has been executed.