Under after-acquired property clauses in mortgages, which statement is true?

• A. It has priority over a purchase-money mortgage
• B. It ranks only if recorded before PMM
• C. It has no relation to PMM
• D. It is always junior to a purchase-money mortgage

Answer: (D)

The concept hinges on lien priority when multiple security interests encumber the same property. A purchase-money mortgage is inherently prioritized because it secures the buyer’s purchase of the property itself. An after-acquired property clause attempts to extend that security to property the borrower later acquires, but it cannot outrank the purchase-money mortgage. In foreclosure or payoff, the purchase-money mortgage would be paid first from the proceeds, and the after-acquired-property security would be subordinate to whatever remains. This is why, in this context, the statement that an after-acquired property clause is always junior to a purchase-money mortgage best fits the rule.