North Carolina § 47-20 - 5. Real property; effectiveness of after-acquired property clause.

§ 47-20. 5. Real property; effectiveness of after-acquired property clause.

As used in this section, "after-acquired property clause" means any provision or provisions in an instrument which create a security interest in real property acquired by the grantor of the instrument subsequent to its execution. As used in this section, "after-acquired property," and "property subsequently acquired" mean any real property which the grantor of a security instrument containing an after-acquired property clause acquires subsequent to the execution of such instrument, and in which the terms of the after-acquired property clause would create a security interest. An after-acquired property clause is effective to pass after-acquired property as between the parties to the instrument containing such clause, but shall not be effective to pass title to after-acquired property as against lien creditors or purchasers for a valuable consideration from the grantor of the instrument unless and until such instrument has been registered or reregistered at or subsequent to the time such after-acquired property is acquired by such grantor and the deed to the grantor of the after-acquired property is registered. In lieu of reregistering the instrument containing the after-acquired property clause as specified in subsection (c), such instrument may be made effective to pass title to after-acquired property as against lien creditors and purchasers for a valuable consideration from the grantor of the instrument by registering a notice of extension as specified in subsection (e) at or subsequent to the time of acquisition of the after-acquired property by the grantor. The notice of extension shall Show that effective registration of the after-acquired property clause is extended, Include the names of the parties to the instrument containing the after-acquired property clause, Refer to the book and page where the instrument containing the after-acquired property clause is registered, and Be signed by the grantee or the person secured by the instrument containing the after-acquired property clause or his successor in interest. The register of deeds shall index the notice of extension in the same manner as the instrument containing the after-acquired property clause. Except as provided in subsection (h) of this section, no instrument which has been heretofore executed or registered and which contains an after-acquired property clause shall be effective to pass title to after-acquired property as against lien creditors or purchasers for a valuable consideration from the grantor of such instrument unless and until such instrument or a notice of extension thereof has been registered or reregistered as herein provided. Notwithstanding the provisions of this section with respect to registration, reregistration and registration of notice of extension, an after-acquired property clause in an instrument which creates a security interest made by a public utility as defined in G.S. 62-3(23) or a natural gas company as defined in section 2(6) of the Natural Gas Act, 15 U.S.C.A. 717a(6), or by an electric or telephone membership corporation incorporated or domesticated in North Carolina shall be effective to pass after-acquired property as against lien creditors or purchasers for a valuable consideration from the grantor of the instrument from the time of original registration of such instrument. History (1967, c. 861, s. 1; 1969, c. 813, ss. 1-3; 1997-386, s. 1.) Legal Periodicals. - For note on the effectiveness of after-acquired property clauses in this State, see 6 Wake Forest Intra. L. Rev. 378 (1970).