A floating lien cannot apply to the proceeds of the sale of after-acquired property.

Question

Quizplus · Accepted Answer

A floating lien is a type of security interest in which the collateral can change over time. However, the lien only attaches to the specific collateral identified at the time the lien was created. This means that if the debtor sells the collateral and acquires new property, the lien does not automatically attach to the proceeds of that sale or to the new property. Therefore, a floating lien cannot apply to the proceeds of the sale of after-acquired property.

A Floating Lien Cannot Apply to the Proceeds of the Sale