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Massachusetts Agencies

After-Acquired Property

Attachments

In Shamrock, Inc. v. F.D.I.C., 36 Mass.App.Ct. 162, 629 N.E.2d 344 (1994) the Appeals Court ruled that an attachment would not attach to after acquired property. In that case, the owners of property, which was already encumbered by a mortgage, approached another mortgagee for an additional loan. The loan was to be made against property which at the time was held in a trust controlled by the owners. Nonetheless, the new lender required as a condition of the loan that the property be conveyed by the trust to the owners, then mortgaged by them, and then returned to the trust, subject to the new (and the old) mortgages. But by the time the conveyance from the trust to the owners occurred and the new mortgage was given to the lender an attachment by Shamrock had already been recorded against the owners.

When the first mortgagee foreclosed its mortgage and realized a surplus, the question arose as to whether the new mortgagee, or Shamrock as an attaching creditor, would be entitled to the extra funds generated by the foreclosure. The court said:

Barring something out of the ordinary, Shamrock’s attachment did not reach [the acquired property] because an attachment does not cover after-acquired property, unless a court were expressly so to order. See Mass.R.Civ.P. 4.1c [which states that “[n]o property may be attached unless such attachment . . . is approved by order of the court.”]

Unlike in the case of mortgages, which do attach to after-acquired and reacquired property based upon the covenants in the mortgage,[1] an attachment (which does not contain any covenants) apparently will not become a lien on after-acquired property, at least in the absence of “something out of the ordinary” (which presumably would include fraud) based on the decision in Shamrock, Inc.. This “something out of the ordinary” might include such things as the reacquiring of property by the owner after a foreclosure, where the foreclosure was solely for the purpose of “cleansing” the title of the attachment. Certainly, the question would pivot on whether there was any fraud in connection with the reconveyance. 

  1. See Ayer v. Philadelphia & Boston Face Brick Company, 159 Mass. 84, 34 N.E. 177 (1893)