What is an After-Acquired Property?

An after-acquired property is any personal or real property who’s title is obtained by a party…after that party has already sold the property. In other words, the seller in the transaction does NOT own the property at the time that seller sold the property. Instead, that seller uses the proceeds of that sale to buy the subject property and transfer it to the end buyer.

For example, Moe sells a house at 1234 N. Main Street to Larry, for $100,000. However, there’s one very big problem. Moe doesn’t own that house; and technically speaking, Moe has no right to sell that property to Larry. Moe also doesn’t have the title to that house, so he cannot legally transfer the title to the house on 1234 N. Main to Larry!

But Moe has a plan. He approaches Curly who does own that house on 1234 N. Main Street. Curly agrees to sell the house to Moe, who uses the $100,ooo he received from Larry. After paying Curly and getting the title to the house, Moe transfers the title to the house on 1234 N. Main Street to Larry.

The end result is that Larry got the house he paid for. More than likely, Moe would pocket the difference between the price he paid to Curly and the $100,000 he received from Larry as his profits. The problem is with the process.

In most states today, this type of transaction would not be able to proceed unless the end buyer (Larry, in this scenario) has full knowledge and agrees to participate in such a transaction.

If it did happen, the judge would give Larry legal title — even though Moe had no legal title to transfer at the time of the original sale. In the interest of legal “equity,” the judge would use the old English legal concept of “After-Acquired Title Doctrine” to ensure that Larry, the end-buyer, has full title to the subject property…even though the process was flawed.

For more information, see also the following entries:

:Closing:

:Creative Finance:

eed of Conveyance:

:Equity:

ersonal Property:

roperty:

:Real Estate:

:Real Property:

:Title: