37.1003 After-acquired real property and fixtures.

Cite as [A.S.C.A. § 37.1003]

The mortgage shall operate only as a contract between the parties with respect to and shall not create a lien upon real property or fixtures acquired in any manner by the mortgagor subsequent to the execution of the mortgage, if there are not described therein the real property, the fixtures and the real property to which the fixtures are or will be affixed, unless and until the mortgagor or the mortgagee, at the time of or subsequent to the acquisition, executes and duly records with the Territorial Registrar an instrument or affidavit containing a reference to the book and page number where the mortgage is recorded and also a description of the real property, the fixtures and the real property to which the fixtures are or will be affixed sufficient to identify and locate them, the description of real property may be made by describing the deed or other instrument of conveyance by which the real property was acquired or by describing the land by metes and bounds.

History: 1978, PL 15-43; 1979, PL 16-48 § 1.

Case Notes:

Statute which states that no instrument shall be effective to create a security interest unless it contains a description of items to be mortgaged prevents the creation of a “general mortgage” and reinforces the statutory prohibition against mortgages on after-acquired real property and fixtures, as well as security interests in personal property. A.S.C.A. §§ 27.1510(c), 37.1003. Shantilal Brothers, Ltd. V. KMST Wholesale, 15 A.S.R.2d 115 (1990).

The general rule against mortgages of after-acquired real property contains an important exception for cases in which the property to be acquired is described in the mortgage document. A.S.C.A. § 37.1003. Shantilal Brothers, Ltd. V. KMST Wholesale, Inc., 16 A.S.R.2d 103 (1990).