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Kim buys factory equipment from Martin and “Sha Na Na” on credit, giving as security an...

Kim buys factory equipment from Martin and “Sha Na Na” on credit, giving as security an interest in all of her equipment—both what she is buying and what she already owns.  The security agreement with Martin and “Sha Na Na” contains an after-acquired property clause. Six months after that, Kim sells the equipment and purchases new equipment. Is it possible for Martin and Sha Na Na to have a security interest in the new equipment?

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Answer #1

Dear Sir / Madam

"After acquired property clause" means the legal contract contains provision regarding assets obtained subsequently will be included in debtors liability to the lender. It is also called as "After acquired clause".

As per legal definition of after acquired property clause, Martin and Sha Na Na have a security interest in the new equipment.

Generally after acquired property clause is an additional security.

I hope i answered your valuable question. I will be happy if yo give nice comment and credit for my sincere effort

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