[Dirty Laundry] Morgan planned to start her own laundry business. She borrowed $60,000 from ABC Bank. She used her car and home as collateral and also gave ABC Bank an interest in any property she acquired after the security interest was made. The bank perfected its interest. Morgan purchased a new computer from XYZ Electronics for use in her business. XYZ obtained a purchase money security interest on the computer. Morgan was having problems with cash flow and failed to make payments to XYZ Electronics on the new computer. After the sale and before Morgan stopped making payments, XYZ had filed a financing statement. The electronics store sought to repossess the computer, but the bank opposed that. Morgan's business picked up and she was able to completely repay her loan to the bank and to XYZ. She requested that the bank discontinue its security interest, but the bank did not do so as requested by Morgan, and still had not done so 45 days after Morgan had paid off the loan and requested that the bank terminate its interest.
-________ property is the proper designation for any equipment subject to the bank's security interest that Morgan obtains after the initial loan agreement.
A) After-acquired
B) Post-dated
C) Cover
D) Post-security
E) Valid

Question

Quizplus · Accepted Answer

The term "after-acquired" property refers to assets that a borrower acquires after the initial loan agreement but which are subject to the lender's security interest according to the terms of that agreement. In this scenario, the bank had an interest in any property Morgan acquired after the security interest was made, making it after-acquired property.

[Dirty Laundry] Morgan Planned to Start Her Own Laundry Business