In
bond indentures and
mortgages, a clause stating that
assets acquired after the contract comes into effect may be regarded as additional
collateral for the
debt. For example, if a person
buys a second house after taking out a
mortgage on his/her primary house, the mortgage
lender may regard the second house as extra security in the event of
default. The after-acquired clause exists to provide additional protection to the lender to ensure that
secured debts are
paid.