After-acquired property

The After Acquired Title Doctrine is a legal doctrine under which, if a grantor conveys what is mistakenly believed to be good title to land that he or she did not own, and the grantor later acquires that title, it vests automatically in the grantee. A practical example is Husband and Wife own Blackacre. Wife is awarded the property through a divorce decree. Wife sells the property to a bonafide purchaser for value. Wife executes a Warranty Deed to the purchaser and the deed is properly recorded. Subsequently, a deed from the Husband to the Wife is recorded. Under the After Acquired Title Doctrine, the interest received by the wife automatically transfers to the new purchaser.

After-acquired property is real property or personal property to which party A obtains title only after falsely selling it to party B for value when party A did so without proper title. An example would be Colonel Sanders pretends to sell "My Old Kentucky Home" to Daniel Boone for $1000 (US) but does not own the property at the time and then uses the money to actually buy that same property from the true owner. The apparent outcome would be Col. Sanders owns the property and Boone has lost $1000.

Because the result of the set of transactions would be an injustice, a legal concept called the "After-acquired-title doctrine" vests the legal title in the property in party B even though buying it before party A had legal title to the property and therefore had no right to transfer the title.^[1] This is an application of the principle of equity to property law. Historically, equity was applied in England in special chancery courts, but in the US, remedies at both law and equity are given in a single court.

Other uses of the term

The term "after-acquired property" also arises in the context of bankruptcy, secured transactions, and the law of wills. In this context, "after-acquired property" is simply property which is acquired by a borrower after a security agreement is signed, by a debtor after a bankruptcy case is commenced, or by a testator after a will is made. In the case of secured transactions, whether the after acquired property becomes part of the collateral pledged by the borrower is dependent upon both the language of the security agreement and § 9-204 of the Uniform Commercial Code.

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